Oracle stock got a massive boost last week from the bullish cloud growth forecast it gave with its fiscal first-quarter results. Wall Street analysts are now sizing up Oracle's chances to gain share and join the ranks of cloud "hyperscalers" Amazon, Microsoft and Google parent company Alphabet
Oracle stock rocketed 41% last Wednesday on its Q1 results. The tech behemoth actually missed earnings estimates but reported eye-popping projections for Oracle's cloud growth. The database technology giant said it ended August with remaining performance obligations of $455, a 359% jump from a year earlier. The backlog of contracted revenue allowed Chief Executive Safra Catz to project's Oracle's cloud infrastructure business will grow 77% to $18 billion this fiscal year and reach $144 billion by its fiscal 2030.
Oracle Cloud Infrastructure is the enterprise tech firm's competitor to Amazon Web Services, Microsoft Azure and Google Cloud Platform. Oracle embraced cloud computing later than those companies and is a smaller player in the business of renting cloud-computing servers to enterprises.
But the firm is benefiting from massive demand from companies creating AI algorithms. In new client notes following Oracle's big quarter, analysts forecast that Oracle can keep winning market share.
"The Oracle story has shifted relatively quickly from a potential cloud and hyperscaler story to a major hyperscaler and AI training/inferencing provider," Bernstein analyst Mark Moerdler wrote to clients early Monday. He rates Oracle stock as outperform with a price target of 363.
Oracle's Total Share Of Cloud Market
Oracle will close its May-ending fiscal 2026 with roughly 5% of the global hyperscaler cloud revenue, according to projections from Jefferies sent to clients late Sunday. That's compared to 44% share for Amazon, 30% share for Microsoft and 21% share for Google.
Jefferies analyst Brent Thill projects that Oracle's share of the total market will increase to 17% by 2030 fiscal year. By then, Thill projects Microsoft's market share will have held steady at 30% while Amazon slips to 33% of the market and Google falls slightly to 19%.
Oracle has a larger backlog than the hyperscalers it is chasing, Thill noted. Oracle's RPO of $455 billion compares to estimates RPO of $368 billion at Microsoft, $195 billion at Amazon and $108 billion at Google, based on Jefferies estimates and reported company data.
Oracle "share gains in the AI era are clear," Thill wrote. He rates Oracle stock a buy.
At Bernstein, Moerdler similarly estimates that Oracle holds about 5% of the total market for hyperscalers as of the most recent quarter. He expects Oracle could eventually close in on Google, the smaller member of the top three hyperscalers.
"With the exceptional OCI growth, strong RPO and the closure of multibillion dollar deals, this level of growth can potentially make OCI equal or exceed GCP by calendar year 2029-2030," Moerdler wrote.
Oracle Stock: Watching Costs Of AI Push
Still, questions remain about the sustainability of Oracle stock's massive AI-fueled rally. Shares pulled back by roughly 11% on Thursday and Friday.
Thill said the "elephant in the room" is how much of Oracle's backlog growth is dedicated to OpenAI. The Wall Street Journal reported Wednesday that OpenAI is contracted to spend $300 billion with Oracle on computing power over roughly five years.
That would make Oracle's backlog and future growth tied strongly to OpenAI's ability to continue scaling its hit ChatGPT product and raising funding from investors.
Another major question amid the excitement is how Oracle will fund the data center expansion needed to meet its current backlog.
"Oracle faces significant capital requirements to support its AI infrastructure ambitions, with free-cash-flow potentially turning negative," Thill wrote. "Funding (both for Oracle and its key end-customer OpenAI) is dependent on capital markets/macro (economic environment)."
Jefferies estimates Oracle's capital expenditures will reach $32 billion this calendar year, compared to $121 billion for Amazon, Microsoft's $112 billion and Google's $85 billion. But that marks a 194% year-over-year capex increase for Oracle, compared to a 55% jump for Amazon and 48% increase for Microsoft.
And Oracle's overall business is much smaller by revenue compared to Amazon, Microsoft and Google.
Thill added that Oracle's estimated $35 billion in capex spending for fiscal year 2026 is still "not anywhere close to what Oracle may need to spend."
Oracle Stock Ahead 75% This Year
But Wall Street analysts expect Oracle can find ways to fuel its growth and attend to its margins.
Thill wrote that Oracle's "management has a track record of improving segment margins with scale."
Meanwhile, Bernstein's Moerdler expects that Oracle's cloud growth could impact margins in the "near term" but drive "very substantial earnings and free-cash-flow growth over the next 5-10 years."
In recent premarket trading on stock market today, Oracle stock is ahead a fraction at 294. Shares are ahead 75% overall this year, though down from a record high of 345.72 that Oracle stock reached midday on Wednesday.
Last year, Oracle stock gained more than 60% for its best performance since 1999. Meanwhile, Oracle stock has an IBD Composite Rating of 94 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one easy-to-use rating.
