Oracle’s Market Position Strengthens Amid Earnings Corrections
Analysts at Evercore ISI have identified Microsoft (NASDAQ: MSFT) and Salesforce (NYSE: CRM) as the companies most resilient to possible spending slowdowns. In contrast, they labeled Oracle (NYSE: ORCL) as one of the firms significantly exposed to such risks.
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Despite this characterization, Oracle’s rapidly evolving business model, particularly its advancements in AI, enhances its resilience beyond initial perceptions.
The shift to cloud technology has been pivotal for Oracle, securing its relevance in the ever-changing tech landscape.
By focusing on data center expansion and next-generation AI capabilities, the company has significantly positioned itself among today’s tech giants.
Oracle, once considered merely a database firm, now plays a crucial role in global databases, AI infrastructure, and AI-assisted services.
Oracle’s Stronghold in the Business Sector
Oracle’s influence in the business arena is impressive, with estimates indicating that approximately 98% of the Fortune 500 utilize its services. While analysts debate the precise number, it’s widely accepted that close to 100% of the Fortune 500 and a slightly lower percentage of the Fortune 100 are clients.
Notable offerings include enterprise resource management, human capital management, and supply chain management—all of which have seen increased adoption as businesses turn to AI-enhanced solutions. The projected annual growth rate for these sectors is expected to be in the low double digits through the end of the decade, starting in early Q2 2025.
Among the significant developments in fiscal year 2025 are new and expanded agreements with the three leading hyperscalers: Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL), and Microsoft (NASDAQ: MSFT). These partnerships have integrated Oracle’s technologies throughout the data center landscape, broadening access to its database and data-centric offerings globally.
While the top three hyperscalers command about 63% of the global market share, Oracle holds a modest 3% share. Nonetheless, it ranks among the top five Western cloud providers by revenue and capacity. Forecasts indicate that Oracle’s capacity could double by 2025 as the company focuses on AI-driven facilities, which would likely enhance its market share.
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Oracle’s Results Show Mixed Performance Despite Positive Trends
Oracle’s performance in the latter half of calendar year 2024 was commendable, although it fell short of the forecasts made by MarketBeat’s consensus. This led to a market correction in its stock price for 2025. Notably, strong results emerged from key cloud segments, including infrastructure as a service (IaaS) and software as a service (SaaS), which are also contributing to a growing backlog of deals.
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According to the remaining performance obligation (RPO) metric, the company’s backlog surged by 49% in Fiscal Quarter 2 and accelerated to 62% in Fiscal Quarter 3, exceeding $130 million—equivalent to roughly nine quarters of revenue at that sales pace. This backlog growth is attributed to high demand for computing resources, which is anticipated to increase further in Fiscal Quarter 4.
Analysts have responded to this information by adjusting their forecasts. Consequently, the outlook for Fiscal Quarter 4, reported in June 2025, has shifted downward, with all analysts reducing their targets while raising expectations for long-term revenue and earnings growth.
Despite this, the company is expected to achieve a top-line growth rate of 9% while maintaining healthy margins. An encouraging earnings forecast suggests potential for outperformance, as it predicts flat to slightly improved year-over-year earnings, indicating that actual growth may surpass expectations.
Oracle’s Stock Price Adjusts, Anticipating Recovery
Following the analysts’ adjustments, Oracle’s stock price targets were reset, which had an adverse effect on market sentiment. The market’s response appears exaggerated, causing the stock to drop significantly below consensus estimates, reaching the lower end of price projections.
This low-end range may serve as a cushion for investor confidence, with the consensus estimate presenting a possible upside of 35% once reached. Many analysts anticipate an upward revision of targets, suggesting the 35% potential movement could act as a minimum benchmark for growth.
Recent price movements additionally hint at a potential rebound, indicating an overextended market situation while showing support at crucial price levels. Currently, the stock is trading at just 10 times the projected earnings for 2023, situated in a deeply undervalued state, and is anticipated to experience significant appreciation in price over the coming years.
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