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Oracle Corporation Common Stock
Our verdict on Oracle Corporation Common Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management expects the proportion of cloud revenues relative to total revenues to continue increasing. (+3 more commitments)
“our expectation that the proportion of our cloud revenues relative to total revenues will continue to increase;”
Expectation that the proportion of cloud services revenues relative to total revenues will continue to increase.
“our expectation that the proportion of our cloud services revenues relative to our total revenues will continue to increase;”
Management expects substantially all software support customers to renew contracts upon expiration. (+1 more commitment)
“our expectation that substantially all of our customers will renew their software support contracts upon expiration”
Oracle has $248 billion in additional lease commitments for data centers and cloud capacity expected to commence between Q3 FY2026 and FY2028. — target: $248 billion (+4 more commitments)
“As of November 30, 2025, we had $248 billion of additional lease commitments, substantially all related to data centers and cloud capacity arrangements, that are generally expected to commence between the third quarter of fiscal 2026 and fiscal 2028”
Management expects to recognize $421 million in amortization of intangible assets for the remainder of fiscal 2026. — target: $421 million
“As of February 28, 2026, estimated future amortization related to intangible assets was as follows (in millions): Remainder of fiscal 2026 $ 421”
See the full cited Management analysis of Oracle Corporation Common Stock
How durable is the business?
The Services segment saw a significant margin expansion from 19% to 24% as the company reduced employee-related expenses and bad debt, despite modest revenue growth. (2 expanding)
“In constant currency, our services business’ total margin and total margin as a percentage of revenues increased... due to higher total revenues and lower total expenses.”
Oracle's moat is strengthening as evidenced by a massive increase in Remaining Performance Obligations (RPO), which reached $552.6 billion, indicating long-term customer lock-in. (1 expanding)
“Remaining performance obligations were $552.6 billion and $130.2 billion as of February 28, 2026 and 2025, respectively. The increase... was primarily attributable to certain significant cloud contracts.”
Oracle's moat is being reinforced by a massive increase in Remaining Performance Obligations (RPO), which reached $455.3 billion, signaling long-term customer commitment to cloud contracts. (4 expanding)
“Remaining performance obligations were $455.3 billion and $99.1 billion as of August 31, 2025 and 2024, respectively. The increase... was primarily attributable to certain significant cloud contracts.”
Hardware revenue is stable in reported currency but contracting by 2% in constant currency as Oracle shifts focus toward cloud-based infrastructure. (1 stable, 1 expanding across 1 engine)
“Our cloud and software business, which represented 87% and 86% of our total revenues in fiscal 2026 and 2025, respectively... Total revenues $58,530 [million]... Total Margin % 59%”
Oracle is aggressively expanding its data center footprint to meet AI demand, with $99.8 billion in future lease commitments not yet on the balance sheet. (1 new)
“As of August 31, 2025, we had $99.8 billion of additional lease commitments, substantially all for data centers, that are generally expected to commence between the second quarter of fiscal 2026 and fiscal 2028.”
See the full cited Business Model analysis of Oracle Corporation Common Stock
Where does growth come from?
Oracle has significantly increased its long-term commitments for data center capacity. Operating lease commitments rose to $18.8 billion, primarily for data centers, with terms extending up to 15 years. (5 accelerating across 5 signals, 1 leading indicator)
“As of February 28, 2026, we had $261 billion of additional lease commitments, substantially all related to data center arrangements, that are generally expected to commence between the fourth quarter of fiscal 2026 and fiscal 2028”
Cloud services now represent 38% of total quarterly revenue, up from 33% in the prior year period. This shift toward recurring cloud subscriptions is a structural trend in Oracle's business model. (5 accelerating across 5 signals)
“Cloud revenues represented 52% and 50% of our total revenues for the three- and nine-month periods ended February 28, 2026, respectively, and 44% and 43% of our total revenues for the three- and nine-month periods ended February 28, 2025, respectively.”
Cloud infrastructure revenue is showing massive acceleration, growing 55% in reported currency and 54% in constant currency, significantly outpacing the broader cloud applications growth of 11%. (3 accelerating, 2 new trend across 5 signals)
“Cloud infrastructure 4,888 84% 81% 2,652”
RPO has reached a staggering $455.3 billion, a massive increase from $99.1 billion a year ago, driven by significant new cloud contracts. (2 accelerating across 2 signals)
“Remaining performance obligations were $552.6 billion and $130.2 billion as of February 28, 2026 and 2025, respectively. The increase in remaining performance obligations as of February 28, 2026 in comparison to February 28, 2025 was primarily attributable to certain significant cloud contracts that were entered into during the period.”
Future lease commitments, primarily for data centers, have surged to $36.7 billion, indicating a massive long-term capacity build-out plan. (2 new trend across 2 signals, 2 leading indicators)
“Total research and development expenses increased by $178 million and $452 million in reported currency in the third quarter and the first nine months of fiscal 2026... We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.”
See the full cited Future Growth analysis of Oracle Corporation Common Stock
What could break the thesis?
Oracle's healthcare business (including Cerner) is subject to strict US laws like the Anti-Kickback Statute. Violations can lead to the company being banned from government programs like Medicare and Medicaid, which would be devastating to that segment's revenue. [REGULATORY]
“The federal Anti-Kickback Statute (AKS) prohibits us from knowingly and willfully soliciting... remuneration... in exchange for referrals... Certain of our products and services may now, or in the future, be subject to the AKS, the federal False Claims Act (FCA).”
INTENSIFYING. Restructuring expenses jumped to $402 million this quarter compared to $73 million last year. The total estimated cost for the new Fiscal 2026 Restructuring Plan has been set at up to $1.6 billion, primarily for employee severance. (4 intensifying, 1 high-severity)
“The total estimated restructuring costs associated with the 2026 Restructuring Plan are up to $2.1 billion... We recorded $1.8 billion of restructuring expenses in connection with the 2026 Restructuring Plan in fiscal 2026.”
INTENSIFYING. Cloud and software expenses surged 41% year-over-year to $3.4 billion, significantly outpacing the 13% revenue growth in that segment. Management explicitly expects cloud and software expenses to continue growing as they expand data center capacity. (4 intensifying, 1 high-severity)
“the constant currency increase in expenses was primarily due to a $5.7 billion increase in infrastructure expenses in fiscal 2026... As of May 31, 2026, we had $260 billion of additional lease commitments, substantially all related to data center arrangements.”
INTENSIFYING. Trailing twelve-month (TTM) free cash flow has collapsed to negative $(5.9) billion from positive $11.3 billion a year ago. This is driven by a 249% increase in capital expenditures to $27.4 billion to support cloud growth. (2 intensifying, 1 high-severity)
“Free cash flow: $(23,686) [million] in 2026... Net cash provided by operating activities as a percent of net income: 187%.”
The company faces intense competition from 'hyperscale' cloud providers like Microsoft, Amazon, and Google. If customers choose to use these competitors' clouds instead of Oracle's, or if Oracle's 'multicloud' strategy (working with competitors) leads customers to migrate away, revenues will decline. [COMPETITIVE]
“Our enterprise cloud, software and hardware offerings compete directly with certain offerings from some of the largest and most competitive companies in the world... This multicloud strategy could lead our customers to migrate away from our cloud offerings to our competitors’ products.”
See the full cited Risk analysis of Oracle Corporation Common Stock
Oracle Corporation Common Stock analysis by filing period
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