Oracle appears to have hit the jackpot. Artificial intelligence is emerging as the new gold in the stock markets. Any company with an Artificial Intelligence (AI) connection is experiencing the golden touch.
The most recent company to ride the AI wave is Oracle. Oracle’s stock surged more than 35% in a single day following the release of the company’s fiscal year 2026 first-quarter financial results, increasing the value of Oracle Chairman and CTO Larry Ellison’s shares to $380 billion. That is a one-day increase of $100 billion.
The big jump in Oracle’s stock price and Larry Ellison’s net worth became the talking point on Wall Street and beyond.
But what’s behind this meteoric rise in the share price? Do some fundamentals back it? Here, we try to explore certain aspects of it.
Oracle’s forward-looking numbers
One of the factors that went in favour of Oracle was the high order value that lifted the investors’ sentiments. The Q1 ‘Remaining Performance Obligations’ were reported at $455 billion, up over 350%.
This jump in the RPO numbers came after the company signed four multi-billion-dollar contracts with three different customers in Q1. The company expects to sign up several additional multi-billion-dollar customers and RPO is likely to exceed half a trillion dollars.
But, important to note that ‘Remaining Performance Obligations’ is a forward-looking metric and provides visibility into future revenue. The RPO denotes the total value of contracted products or services that are yet to be delivered to the customers.
The company also said that “it expects an increase in revenues in the next four years, although most of the revenue in this 5-year forecast is already booked in our reported RPO.”
The big jump in the RPO number is essentially a projection that sent the stock price soaring despite the company reporting an earnings and revenue miss for Q1.
Oracle’s Cloud Business
The market also cheered Oracle’s cloud infrastructure business and a host of new artificial intelligence deals. MultiCloud database revenue from Amazon, Google and Microsoft grew at the incredible rate of 1,529% in Q1.
Next month, the company is introducing a new Cloud Infrastructure service called the ‘Oracle AI Database’ that will enable Oracle’s customers to use the Large Language Model of their choice—including Google’s Gemini, OpenAI’s ChatGPT, xAI’s Grok, etc.— directly on top of the Oracle Database to easily access and analyze all their existing database data.
For the last five decades, Oracle has been a strong player in the Cloud Computing business. Now, it’s looking to become a formidable player in the AI-led tech sector.
AI Deals
The foray of Oracle into AI is not something the world came to know suddenly. Earlier in the year, US President Donald Trump had unveiled what he called ‘the largest AI infrastructure project in history’ – a $500bn joint venture between OpenAI, Oracle and SoftBank that aims to build a network of data centres across the US.
The new partnership, dubbed Stargate, aims to construct essential data centers and computing infrastructure needed to power artificial intelligence development and, according to Trump, create more than 100,000 American jobs “almost immediately”.
OpenAI and Oracle have reportedly signed a deal to purchase $300 billion in computing power over roughly five years. Oracle has also secured contracts with other large technology companies, including Meta, xAI and Nvidia, in recent quarters.
Word of Caution
Investors need to be cautious about two things: One, the high valuations that some of these AI and AI-led companies enjoy, and second, the top management’s ethics in running the business.
In the dot-com crash of 2000, when none of the Internet stocks were spared, Oracle’s stock price crashed by over 80%. If and when the AI bubble bursts, there could be complete bloodshed on the street.
In 2022, Bloomberg Law reported that Oracle and its senior leaders, including chairman Larry Ellison, must face class action litigation over claims they misled investors about the financial health of the tech giant’s cloud computing segment, a federal judge in San Jose, California, ruled.
Earlier in 1993, Oracle agreed to pay a Federal fine of $100,000 to settle a complaint by the Securities and Exchange Commission accusing the company of numerous accounting irregularities in the late 1980s, reported The New York Times.
Stock Price
Oracle (ORCL), listed on NYSE with a market capitalization of nearly $875 billion, is expected to reach a trillion dollars soon.
ORCL is up over 90% in the last 12 months and also YTD, and trades around $307. Oracle’s 12-month forward price-to-earnings multiple is about 45.3, compared with Amazon’s 31.3 and Microsoft’s 31.
Summing Up
AI is rapidly changing the investing landscape. Oracle’s foray into the AI market alongside the ‘who’s who’ of AI could be just the beginning of a new chapter for the company. Whether the one-day movement translates into a sustainable performance for the shareholders remains to be seen.