Oracle(US:ORCL) ZACKS·2026-03-03 13:45Core Insights - Oracle's AI-driven backlog expansion is enhancing its growth outlook and revenue visibility, with Remaining Performance Obligations (RPO) increasing by 40% year-over-year in Q2 FY26, indicating strong demand from large enterprise customers [1][10] Group 1: Financial Performance - Cloud revenues surged by 34% year-over-year to $8 billion, constituting approximately half of Oracle's total revenues, reflecting a successful transition to recurring, AI-based revenue streams [2] - Management anticipates an additional $4 billion in revenues for fiscal 2027 linked to new AI contracts, while maintaining a fiscal 2026 revenue forecast of $67 billion, indicating strong forward visibility [3] - The Zacks Consensus Estimate projects total revenue growth of 16.6% for fiscal 2026 and 27.6% for fiscal 2027, supporting the case for sustained growth [4] Group 2: Competitive Landscape - Oracle faces significant competition in AI infrastructure from Amazon, which has an annual revenue run rate of $142 billion, bolstered by a strong AI-driven backlog and custom chips that enhance performance [5][6] - Salesforce competes with Oracle primarily in AI-driven applications, reporting $72 billion in RPO, showcasing strong backlog visibility and rapid growth in its Agentforce platform [7] Group 3: Valuation and Estimates - Oracle's stock has declined by 33.4% over the past six months, underperforming the Zacks Computer and Technology sector's growth of 7.6% [8] - The stock is currently trading at a forward 12-month P/E ratio of 18.81X, which is below the industry average of 21.79X, indicating potential undervaluation [12] - The Zacks Consensus Estimate for Oracle's fiscal 2026 earnings is $7.45 per share, suggesting a growth of 23.55% compared to fiscal 2025 [15]