Oracle stock is surging, so why do analysts say it cannot be disrupted?

Oracle just pulled off a big surprise

Oracle, the massive tech company that’s been around for nearly 50 years, just shocked everyone with its latest earnings report. The stock jumped almost 10% after they showed numbers that were better than Wall Street expected.

People were getting worried that Oracle’s big bet on artificial intelligence was costing too much money. But this quarter proved those fears might have been overblown. The company earned $1.79 per share, which beat what analysts were predicting, and their sales hit $17.2 billion.

The cloud business is on fire

Oracle’s cloud division is absolutely crushing it right now. This part of their business grew 44% compared to last year and now makes up more than half of everything Oracle sells. The really exciting part is their Oracle Cloud Infrastructure, which grew 84% to $4.9 billion.

That’s actually faster growth than the previous two quarters. Think of it like this: while Amazon, Microsoft, and Google are the big names in cloud computing, Oracle is the new kid on the block that’s growing the fastest. And in tech, speed matters a lot.

That giant backlog number is real

Remember that mind-blowing $455 billion backlog Oracle announced last September? Well, it just got even bigger. Their remaining performance obligations, which is fancy talk for work they’ve already sold but haven’t done yet, hit $553 billion.

That’s a 325% jump from last year. Think about it this way: Oracle already knows they’re going to make more than half a trillion dollars from contracts they’ve already signed. Most companies would kill to know what they’re making next month, let alone years down the road.

The stock had a tough year until now

Even though Oracle just had this amazing quarter, the stock had been having a rough time. Before this earnings report, shares had dropped more than 50% from their record highs back in September. Investors were nervous about how much money Oracle was spending on AI data centers.

Building all that stuff costs billions, and people worried the company was digging itself into a financial hole. But Wednesday’s jump showed that investors are starting to believe Oracle knows what they’re doing with their money.

They’re spending big on data centers

Speaking of spending, Oracle dropped $18.6 billion on buildings and equipment this quarter. That’s way more than the $12 billion analysts were expecting. Most of that money went toward building new AI-focused data centers.

But here’s the good news, Oracle says they’re sticking to their plan of spending about $50 billion this year. They’re not increasing that number, which gave investors some peace of mind. The company also said they’re raising money through a mix of debt and stock sales to help pay for all this building without putting themselves in a dangerous spot.

OpenAI is a huge part of the story

You’ve probably heard of ChatGPT, right? Well, the company behind it, OpenAI, just raised a ton of money from investors. And guess who one of their main cloud partners is? That’s right, Oracle signed a massive $300 billion, five-year agreement with OpenAI to provide computing power for their next generation of AI models.

When OpenAI got all that new funding, it basically guaranteed they could pay Oracle for all those cloud services they signed up for.

The bring your own chips strategy

Oracle said many of its large AI contracts are structured so customers either prepay for equipment or buy GPUs themselves and supply them to Oracle. That setup can reduce the upfront capital Oracle needs to commit to those deals.

It does not mean Oracle has avoided negative cash flow altogether. In its latest quarterly filing, Oracle reported a trailing four-quarter free cash flow of negative $24.7 billion because capital spending remained extremely high.

Oracle says AI won’t kill their business

Lately, people have been worried that AI might put traditional software companies out of business. But Oracle’s founder basically laughed at that idea on the earnings call and said the SaaS doomsday theory. applies to other companies, but not to Oracle.

He said that while some smaller software companies might get hurt by AI, Oracle won’t be one of them. Their systems are too big and too important to be replaced by some AI tools slapped together. Think of it like this: AI might be able to write a poem, but it can’t replace the massive databases that banks and hospitals rely on every single day.

Wall Street is feeling better about this

Analysts who follow Oracle for a living are breathing a sigh of relief. One Barclays analyst raised his price target to $240, saying the path forward looks clearer now.

Another analyst from Wedbush called this report a huge relief for investors. The big takeaway from these experts is that Oracle is starting to turn all those giant contracts into actual revenue. And when that happens, people stop worrying so much about how much money the company is spending to build all those data centers.

Fun fact: This quarter marked the first time in over 15 years that Oracle grew both total revenue and adjusted earnings by 20% or more at the same time.

The risks haven’t totally gone away

Oracle still faces meaningful financial and execution risk as it expands its AI infrastructure business. In its February 28, 2026, balance sheet, Oracle reported about $134.6 billion in notes payable and other borrowings.

Credit analysts have also warned that leverage, cash flow, and contract profitability remain key watch points as Oracle builds out data centers for large AI customers. Those concerns did not disappear just because one quarter came in strong.

The bulls vs the bears

The people who love Oracle stock think it could hit $240 or even higher. They point to all those contracts, the AI demand, and Oracle’s huge database business that’s been around forever.

The skeptics, though, see a different picture. They worry about the debt, the spending, and whether AI might actually hurt Oracle’s older businesses. Some analysts have price targets as low as $160, which shows there’s still a big debate about where this stock is headed.

Want to see the deal that’s fueling all this optimism? Take a look at Oracle joins forces with OpenAI in massive $300 billion cloud deal.

What happens next for Oracle?

Oracle says they expect sales to keep growing 19% to 21% in the current quarter. They also raised their revenue forecast for 2027 to $90 billion, which is higher than what analysts were expecting.

The company has to prove it can turn all those contracts into cash without putting itself into trouble. But for one day at least, investors decided to believe in the comeback story. The stock jumped above key levels it hadn’t seen in months, and suddenly a company that’s been around since the 1970s looks like an exciting AI bet again.

Want to see how Oracle is reshaping the company to chase that AI growth? Take a look at Oracle’s layoffs as the company shifts resources toward AI growth.

What do you think about Oracle’s big AI and cloud push, exciting move, or too risky? Drop your thoughts in the comments and hit that like button if you enjoyed the read.

This slideshow was made with AI assistance and human editing.

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