Oracle’s ORCL collaboration with xAI to deploy its Grok models via the Oracle Cloud Infrastructure (“OCI”) is expected to further drive momentum in the company’s cloud services and license support revenues in the near term.
OCI spans domains like compute, databases and AI services, providing end-to-end solutions for enterprise workloads. Oracle’s 23 AI database has helped businesses integrate AI solutions by automating workflows and providing flexibility to tailor models to business-specific needs.
Oracle had previously demonstrated its ability to host, train and scale various models through partnerships with Cohere, LLAMA 2 and NVIDIA AI Enterprise. The latest partnership with xAI is expected to significantly increase OCI compute, storage and network usage. Additionally, the seamless deployment of Grok models is likely to encourage long-term contract renewals.
Looking forward, total cloud revenues are expected to grow 26-30% for the first quarter of 2026, and by over 40% for fiscal 2026. The company also noted that for fiscal 2026, cloud infrastructure revenues are projected to grow even more than 70%, up from 51% in the prior year.
The Competitive Landscape: ORCL’s Fight With the Giants
Oracle faces tough competition from players like Alphabet GOOGL and Amazon AMZN.
Alphabet’s Google Cloud invests heavily in custom AI chips called TPUs and recently introduced its latest version, Ironwood. The company recently launched the “Cloud Wide Area Network,” making Google’s private cloud network globally accessible. The recent inclusion of Gemini 2.5 and Flash into Alphabet’s Vertex AI Platform is expected to transform enterprise-AI sophistication.
Amazon’s cloud services are deployed via AWS. Amazon’s AI applications like Alexa+ and its latest AI chip, Trainium 2, are delivering massive improvements in performance and efficiency. Amazon’s Bedrock recently integrated Anthropic's Claude 3.7 Sonnet and Meta’s Llama 4 model family to build high-quality Generative AI applications. The company recently launched a preview version of Amazon Nova Act, designed to help developers break down complex tasks and perform commands in web browsers.
ORCL’s Share Price Performance, Valuation and Estimates
ORCL’s shares have appreciated 27.7% in the year-to-date period, outperforming both the Zacks Computer and Technology sector’s return of 5.5% and the Zacks Computer-Software industry’s appreciation of 14.6%.
Oracle’s shares have also outperformed Alphabet and Amazon in the year-to-date period. While shares of GOOGL dropped 8.4%, AMZN plunged 1.0%.
ORCL’s YTD Price Performance
Image Source: Zacks Investment Research
Oracle trades at a three-year EV/EBITDA of 26.53X, substantially above the Zacks Computer-Software industry average of 19.86X. ORCL has a Value Score of D.
ORCL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ORCL’s fiscal 2026 revenues is currently pegged at $66.63 billion, indicating 16.08% year-over-year growth. The consensus mark for 2026 earnings is pegged at $6.71 per share, up 1.05% over the past 30 days. This indicates an 11.28% increase from the figure reported in the year-ago quarter.
Oracle Corporation Price and Consensus
Oracle Corporation price-consensus-chart | Oracle Corporation Quote
ORCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpAmazon.com, Inc. (AMZN) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
