Oracle Corporation

What they do

Oracle sells enterprise applications and infrastructure offerings that embed AI, delivered via cloud, on-premise, and hybrid models. Its cloud business comprises Oracle Cloud Applications (SaaS) and Oracle Cloud Infrastructure (IaaS). The company also sells software licenses and support, hardware, and professional services.

Revenue drivers

• Cloud Infrastructure (IaaS) — Q4 FY2026 revenue $5.8 billion, up 93% year over year; FY2026 revenue $18.1 billion, up 77%. Customers deploy workloads on Oracle's cloud and AI infrastructure.
• Cloud Applications (SaaS) — Q4 FY2026 revenue $4.1 billion, up 10%; FY2026 revenue $15.9 billion, up 11%. Includes enterprise application suites with embedded AI.
• Software licenses and support — Q4 FY2026 revenue $6.8 billion, down 2% as customers migrate to cloud; FY2026 revenue $24.5 billion, down 1%. Remains a large recurring revenue base.
• Services and hardware — Q4 FY2026 services revenue $1.5 billion (up 13%) and hardware revenue $0.9 billion (up 9%). FY2026 services revenue $5.7 billion and hardware revenue $3.1 billion.

Recent performance

In Q4 FY2026, total revenue rose 21% to $19.2 billion, with cloud revenue up 47% to $9.9 billion. FY2026 total revenue was $67.4 billion, up 17%, and cloud revenue was $34.0 billion, up 39%. GAAP EPS rose 34% to $5.83 for the year. Operating cash flow reached a record $32.0 billion (up 54%), but free cash flow was negative $23.7 billion due to data center spending. Remaining performance obligations ended the quarter at $638 billion, up 363% year over year.

Strategy

Oracle is investing heavily in data centers to capture AI cloud demand, with fiscal 2026 capital expenditures of $39.2 billion in the first nine months. It raised $43 billion in debt and $5 billion in equity in fiscal 2026 and plans about $40 billion more in fiscal 2027 via debt and equity, including a $20 billion at-the-market equity program. Management says much of the RPO increase comes from large AI contracts; $75 billion of prepaid or customer-supplied GPUs reduce the capital Oracle must raise. The company also emphasizes multicloud and hybrid deployments to broaden adoption.

Risks

• AI product performance risk — Oracle's AI products may not operate as anticipated, which could adversely affect reputation, revenues, and profitability.
• Cloud strategy execution risk — If Oracle does not successfully execute its Oracle Cloud strategy, including cloud offerings, revenues and profitability may decline.
• Data center capacity risk — If Oracle cannot secure data center capacity at affordable rates or accurately plan infrastructure requirements, profitability could decline.
• Complexity and supply chain risk — Cloud and hardware offerings are complex, and failures in sourcing technologies or components could hurt these businesses.

Outlook

Management expects capital expenditures to continue increasing through the remainder of fiscal 2026 and into the next few years as it adds data center capacity and enters new geographic locations. Oracle plans to raise about $40 billion in fiscal 2027 through a combination of debt and equity, including a $20 billion at-the-market equity issuance. The company highlights 'unprecedented opportunities' in AI cloud infrastructure, with RPO growing $85 billion sequentially in Q4 to $638 billion.