A $7 Billion Reason to Buy Oracle Stock Now

Oracle Corporation (ORCL) has given investors another compelling reason to stay bullish. The enterprise software giant recently secured a landmark agreement worth up to $7 billion with the U.S. Department of Defense, reinforcing its growing role as a trusted technology partner for government agencies.

The Pentagon awarded Oracle a nearly $7 billion Enterprise Software Agreement that could run for up to 10 years. The contract consolidates the Defense Department’s existing Oracle software licenses and support services into a single enterprise-wide agreement covering the military, intelligence community, and Coast Guard. The arrangement is expected to streamline procurement, improve cybersecurity, and save taxpayers at least $441 million through reduced software duplication and centralized licensing.

Oracle has transformed itself from a legacy database company into one of the fastest-growing cloud infrastructure providers. Evidently, demand for Oracle Cloud Infrastructure (OCI) continues to accelerate as enterprises deploy AI workloads that require high-performance computing and scalable cloud capacity. The DoD agreement further validates Oracle’s technology capabilities in highly regulated and security-sensitive environments and might position it to capture additional spending over time.

Although the nearly $7 billion agreement largely consolidates existing Oracle software purchases rather than representing entirely new revenue, it strengthens Oracle’s customer relationships, extends contract duration, and increases revenue predictability. Combined with Oracle’s rapidly expanding AI infrastructure business and growing cloud backlog, the Pentagon deal reinforces the investment thesis that Oracle is evolving into one of the biggest beneficiaries of enterprise AI adoption.

About Oracle Stock

Known for its pioneering relational database software and enterprise tools, Oracle has evolved into a powerhouse in cloud infrastructure, SaaS applications, hardware systems, and consulting services. Headquartered in Austin, Texas, the firm serves a global client base, and with a market cap of $331.2 billion, the company ranks among the world’s top software and cloud computing firms.

Oracle shares have endured a difficult 2026 despite the company’s strong position in cloud computing and artificial intelligence (AI). The stock has fallen 51% over the past 52 weeks and is down 38.5% year-to-date (YTD), making it one of the weakest performers among large-cap AI infrastructure companies. Investor sentiment has been pressured by concerns over Oracle’s aggressive capital spending, rising debt to fund AI data center expansion, and broader worries about returns on massive AI investments.

The announcement of Oracle’s near-$7 billion, 10-year enterprise software agreement with the U.S. Department of Defense initially lifted sentiment. In premarket trading following the news, Oracle shares gained 2.3%, as investors welcomed another major government contract.

However, the early optimism proved short-lived. By the close, Oracle shares had fallen 4.2% intraday while hitting a fresh 52-week low of $114.75 during the session, as broader concerns over AI-related capital expenditures overshadowed the positive contract announcement. Investors remained focused on Oracle’s heavy spending to expand cloud infrastructure, suggesting that while the Pentagon deal strengthens Oracle’s long-term revenue visibility, the market is currently prioritizing execution risks and profitability over new contract wins.

The stock is currently trading at a significant discount compared to peers and its own historical average at 18.56 times forward price-to-earnings.

Q4 Results Demonstrate Cloud Momentum

Oracle reported its fiscal fourth-quarter and full-year 2026 results on June 10, delivering another quarter of impressive cloud-driven growth.

For the quarter ended May 31, 2026, Oracle generated $19.2 billion in revenue, an increase of 21% year-over-year (YOY). Adjusted earnings per share (EPS) came in at $2.11, up 24% from the prior-year period and above expectations.

Cloud remained the key growth engine. Total cloud revenue surged 47% YOY to $9.9 billion, while Oracle Cloud Infrastructure (OCI) revenue skyrocketed 93% to $5.8 billion, reflecting continued demand for AI workloads and large-scale cloud deployments. Meanwhile, software revenue declined 2% YOY as customers continued migrating from legacy software products to cloud-based offerings.

Plus, Oracle’s remaining performance obligations (RPO) climbed 363% YOY to $638 billion, underscoring the company’s rapidly expanding backlog of cloud and AI-related business.

For fiscal 2026, Oracle delivered $67.4 billion in revenue, representing about 17% YOY growth. Moreover, the company invested heavily to support that growth. Capital expenditures reached around $55.7 billion during fiscal 2026, exceeding management’s original target of $50 billion as Oracle aggressively expanded data-center capacity to meet surging AI demand.

Furthermore, for fiscal 2027, Oracle reaffirmed its expectation of $90 billion in revenue, while raising its adjusted EPS outlook to $8.05 per share.

For the fiscal first quarter of 2027, Oracle expects revenue growth of 27% to 29% YOY, while cloud revenue is projected to increase 57% to 63%, signaling that AI-related demand remains extremely strong.

The main concern for investors is spending. Oracle expects fiscal 2027 capital expenditures of up to $95 billion, with around $70 billion funded directly by the company and another $20 billion to $25 billion expected to be reimbursed by customers. Management also plans to raise nearly $40 billion through debt and equity financing to support its expansion.

Analysts predict EPS to be around $6.47 for fiscal 2027, up 2.5% YOY, and surge by 35.7% annually to $8.78 in fiscal 2028.

What Do Analysts Expect for Oracle Stock?

Bernstein remains constructive on Oracle despite the stock’s recent weakness. Following Oracle’s latest quarterly results, analyst Mark Moerdler raised his price target to $325 from $319 and reiterated an “Outperform” rating, reflecting continued confidence in the company’s long-term growth trajectory.

Also, TD Cowen reiterated its “Buy” rating and $300 price target on Oracle after the company’s fourth-quarter results.

Oracle stock has a consensus “Strong Buy” rating overall. Among the 44 analysts covering the tech stock, 33 recommend a “Strong Buy,” one gives a “Moderate Buy,” nine analysts stay cautious with a “Hold” rating, and one gives a “Strong Sell” rating.

While its average price target of $252.09 indicates an upside of 110.3%, the Street-high target price of $400 suggests that the stock could rally as much as 233.7%.