Tech Corner: Recent Results from Oracle Point to a Healthy Datacenter Cloud Space!

By Daniel Morgan, Synovus Trust Senior Portfolio Manager
Synovus Trust Company, N.A.

Oracle reported strong 4Q25 results and better-than-expected guidance on share gains across applications, data base and cloud infrastructure. The company reported revenue and earnings per share (EPS) of $15.9 billion/ $1.70 versus consensus of $15.58 billion/$1.64. Total revenue grew 11% Year-over-Year (YoY) versus an estimate of 9%, led by Cloud Services growth of 27%, an acceleration from 25% last quarter and 20% a year ago. Oracle Cloud Infrastructure (OCI) grew 52% YoY, including Cloud Database growth of 31%, while Fusion SaaS applications grew 22%. Total remaining performance obligation (RPO), or bookings, grew 41% YoY to $138 billion in 4Q25. Further, management guided RPO to more than double in FY2026, driven by large new customer commitments including some but not all of OpenAI/Stargate.

For FY2026, ORCL projected a revenue increase of at least 16% compared to the consensus of 14%, including Cloud services growth of 40% and Infrastructure growth of 70% year-over-year. Oracle’s revenue growth is set to accelerate, as its cloud business (44% of total) becomes a larger part of the mix, driven by growth in SaaS apps, Autonomous Database (AD) and new workloads moving to Oracle Cloud Infrastructure. OCI is gaining share of public cloud workloads, led by deployment flexibility, AD migrations and AI, where Oracle has a performance and cost advantage. Oracle struck deals with Amazon, Google and Microsoft for OCI to run inside their cloud infrastructure, which should accelerate AD migration and expand the TAM. Oracle SaaS apps, including AI agents, are gaining share of small-to-midsize customers with its broad Cloud portfolio, with two-thirds as first-time customers. At this point, Oracle management has emphasized that the current Cloud revenue has been constrained by capacity, not overall demand.

In previous quarters, Oracle’s revenue growth had come up short of expectations, largely driven by ongoing constraints on Datacenter Buildouts. Confidence seems to be improving in FY26 as Total Revenues are targeted at $66 billion, with an aspirational goal set for 20% top-line growth in FY27. Oracle is a legacy enterprise software player that should continue to benefit from a favorable mix in the businesses: Cloud apps, OCI and Strategic hardware. Greater than 70% of Oracle’s revenue is recurring/renewable, adding protection against severe downturns in IT software deal flow.

Oracle's 4Q25 results saw a massive 41% YoY increase in remaining performance obligation (RPO), or bookings, to close the year down at $138 billion. The company again ascribed the lion's share of booking gains to large contracts for OCI supporting GenAI training workloads. The strong RPO helps and it seems that Oracle expects the capacity constraints to ease in 1Q26, which should lead to better numbers and provide the company with an opportunity to increase investor confidence on its raised growth outlook. The bottom line, Oracle has done a lot of work convincing investors of the long-term value of its building RPO balance. While upcoming events may shed some incremental light, FY27 feels like a long time to wait for the inflection in earnings.

Oracle’s revenue growth is set to gradually accelerate, as its cloud business (38% of its total) becomes a larger part of the mix, driven by consistent growth in IaaS, SaaS apps and accelerating growth in Oracle Cloud Infrastructure. OCI is gaining share of public cloud workloads, led by deployment flexibility, database migrations and AI, where Oracle has performance and cost advantage. It is looking for continued strength and an acceleration in OCI revenue growth in the upcoming quarters. Oracle is actively investing in building datacenters to support growth in its OCI solution. OCI is growing faster than its hyperscaler peers (Oracle’s IaaS was up 52% in 4Q25), albeit off a smaller base, and potentially taking market share from cohorts. During the last quarter (CY1Q25), AWS cloud revenues were $29.267 billion, up 17%; Azure’s were $23.64 billion, up 34%; GCP was at $12.26 billion, up 28%; and Oracle IaaS/SaaS at $6.7 billion, and up 27%. So Oracle could close the gap on GCP, based on management’s FY26 estimate of more than 40% for total cloud growth! Should Oracle’s OCI business maintain a high rate of growth for a long period or growth accelerate, total revenue growth may be better than expected, which will likely positively impact shares.

Despite near-term headwinds, investors seem to view Oracle shares (up 27% YTD) as a safe haven in an unpredictable software space! Despite all the well-publicized roadblocks, Oracle’s saving grace seems to be the mission critical nature of its offerings, and its customer base tilted to extremely large, durable enterprises and governments. Management has spoken confidently about the pipeline and reiterated its target for accelerating organic revenue and profit growth, even in a more uncertain economic environment, driven by cloud migrations, which can save customers money and drive productivity. Expect continued traction in OCI and growth sustainability for its SaaS offerings as key drivers in the quarter. The company should see accelerating cloud momentum in its core database products and should manage to hold up amid macroeconomic headwinds.

Can Oracle leverage its dominance in database to compete with major IaaS cloud players like Amazon’s AWS, Microsoft’s Azure and Alphabet’s GCP? Oracle should be able to maintain its top spot and regain some lost market share in databases, despite rising threats from Microsoft, Amazon.com and SAP. Oracle has about 42% of the relational database market, or 1.7 times its nearest rival, according to IDC data. Database is a mature market with only a 3-5% compound annual growth rate (CAGR). While its share has been eroding slowly over the past few years as cloud-based databases have grown faster than on-premises, its recent strong push in cloud infrastructure should start to pay off over the next year or so. That should allow it to capture that market's 30%-plus growth. Oracle's dominant position in databases, a large installed base of 400,000 customers and the sticky nature of these products should help it become a credible cloud-infrastructure competitor, despite threats from Amazon.com and Microsoft. If Oracle migrates DB workloads to the cloud, they will need to run in an Oracle IaaS environment. This spells a HUGE future opportunity for Oracle to gain market share in the lucrative IaaS Cloud space!

So what can we conclude from Oracle’s recent FY2025 results? Investors’ concerns surrounding the sustainability of datacenter cloud growth can be put aside, for at least today. We will learn more about the overall health of the sector when Amazon’s AWS, Microsoft’s Azure and Alphabet’s GCP datacenter cloud businesses report in July. Are these recent Oracle financial results a possible “watershed” moment, signaling the beginning of a new era of top-line growth acceleration driven by the cloud datacenter. It’s similar to the inflection point Microsoft experienced in 2016 when the company transposed itself from an old-line desktop enterprise software company, to become the No. 2 player in the cloud.

In conclusion, these questions will be answered over time. For now, investors can take a sigh of relief that despite all the worries surrounding the potential negative impact of tariffs the datacenter cloud business is still alive!