Oracle Skyrocketed Based on Its AI Outlook. Is It Too Late to Buy the Stock?

Core Insights - Oracle's cloud infrastructure revenue surged 55% year over year to $3.3 billion, with multicloud database revenue increasing by 1,529% in the quarter, and a forecast of $144 billion by fiscal 2030 from $10.3 billion in fiscal 2025 [1][4][11] Financial Performance - Overall revenue increased 12% to $14.93 billion, slightly missing the analyst consensus of $15.04 billion, while cloud revenue jumped 28% to $7.2 billion [8] - Adjusted earnings per share rose 6% to $1.47, just short of the $1.48 analyst consensus [8] - Management expects fiscal 2026 revenue to increase by 16% on a constant-currency basis and has raised capital expenditure plans to $35 billion [9][10] Growth Projections - Cloud infrastructure revenue is projected to grow significantly over the next five years, reaching $18 billion in fiscal 2026, $32 billion in fiscal 2027, $73 billion in fiscal 2028, $114 billion in fiscal 2029, and $144 billion in fiscal 2030 [6][11] - The company has $455 billion in remaining performance obligations, a 359% increase from the previous year, indicating strong future revenue visibility [7] Market Position and Strategy - Oracle is leveraging its position in the AI inference market, allowing customers to connect Oracle databases and cloud storage to utilize large language models [2] - The company is experiencing a last-mover advantage in cloud computing, attracting top AI model companies and partnerships with major cloud providers like Amazon, Alphabet, and Microsoft [3] Capital Expenditure and Debt - To meet rising demand, Oracle will need to invest heavily in data center capacity, with a significant portion of capital expenditures directed towards graphics processing units [10][12] - The company currently holds over $80 billion in debt and did not generate free cash flow in the past year, indicating potential challenges in financing its expansion [12]