$Oracle(ORCL.US)

Oracle’s AI transformation is increasingly driven by Infrastructure-as-a-Service (IaaS) and Remaining Performance Obligations (RPO). IaaS provides on-demand computing, networking and GPU capacity for AI training and inference, making it Oracle’s fastest-growing business. RPO represents contracted revenue yet to be recognised, offering visibility into future cash flows and demand. In FY2026, Oracle’s IaaS revenue surged 77% to US$18.1 billion, while total cloud revenue reached US$34.0 billion. More strikingly, RPO climbed to a record US$638 billion, highlighting years of committed AI infrastructure demand. FY2026 revenue increased 17% to US$67.4 billion, with EPS rising 34%, reinforcing strong operating momentum.

Fundamentally, Oracle is evolving into a hyperscale AI infrastructure provider alongside its database franchise. However, this growth comes at a price. FY2026 capital expenditure reached US$55.7 billion, with management guiding up to US$95 billion for FY2027, temporarily suppressing free cash flow and margins as new data centres are built.

Technically, Oracle remains in a long-term bullish trend despite recent volatility following earnings, with support likely emerging around major moving averages after profit-taking. The primary risks over the next 12–24 months are execution on AI capacity expansion, rising debt, and converting its massive RPO backlog into profitable revenue. Nevertheless, the combination of accelerating IaaS growth and unprecedented contracted demand continues to underpin a robust long-term investment case. This article is for informational purposes only and does not constitute financial advice.