As Oracle Deepens Its Partnership with AWS, Here’s How You Should Play ORCL Stock

Oracle (ORCL), the erstwhile database powerhouse and now a serious cloud player, has made it known to the market that it has not forgotten its roots. The latest deal with Amazon.com (AMZN) Amazon Web Services proves it. The Larry Ellison-led company's Oracle AI Database has extended its partnership with the cloud leader, with the enhanced capabilities now available in 22 AWS regions.

Elaborating on the deal, Nathan Thomas, senior vice president of product management at Oracle, said, “Just one year after general availability, Oracle AI Database@AWS has reached global scale, with customers running business-critical workloads, and 22 AWS Regions available across Asia Pacific, Europe, and the Americas. This momentum demonstrates that enterprises want a simpler, lower-cost path to modernize their most important Oracle workloads within AWS environments. With the global reach and innovative new services we have made available over the last year, we are delivering that path and enabling more and more customers to put AI to work on live business data and build new applications without re-architecting or compromising performance.”

Although this was not enough to change the path of ORCL stock, which has been under pressure -22.77% year-to-date (YTD), Oracle AI Database can emerge as a new value driver for the company, leveraging a domain in which it is a market leader.

In With The Old, In With The New

Oracle's emergence as a noteworthy AI infrastructure player last year took the market by surprise and Larry Ellison to the very top of the world's richest charts. A lot has happened since then, with the company's 5-year CDS reaching its all-time highs and critics pointing to customer concentration risks with respect to its dependence on OpenAI for backlog.

However, as highlighted by Thomas earlier, Oracle AI Database has been in action for just about a year and has the potential to be a new value driver. Also, it is of strategic importance as it is trying to turn its database from a traditional system of record into an AI-native data platform. A key development in that regard has been the Oracle AI Database 26ai, replacing Oracle Database 23ai.

26ai is the latest long-term support version of Oracle Database, rebuilt around the idea that AI should operate where corporate data already resides. It combines familiar relational processing with vector, graph, spatial, text, and JSON data in one engine. AI Vector Search can examine the meaning of documents, images, and other unstructured information while applying normal business filters through SQL. 

On the other hand, Select AI lets users ask questions in natural language, while agent tools can retrieve information and perform governed tasks. Crucially, this is not a separate AI product loosely connected to Oracle Database. AI capabilities sit inside the database and inherit its security, transaction processing, backup, and availability controls. Advanced features such as AI Vector Search are also included without an additional license charge, according to Oracle.

More importantly, this architecture brings Oracle’s database heritage and newer cloud capabilities together rather neatly. Customers can run the same core technology in OCI, their own data centers, or competing clouds. Autonomous AI Database adds automated patching, tuning, backup, scaling, and recovery, while Exadata supplies specialized infrastructure for large transaction, analytics, and vector workloads. Oracle has also added Apache Iceberg support, allowing its database and lakehouse services to work with open data used by platforms such as Databricks and Snowflake. For enterprises, that reduces the need to copy sensitive information into a separate vector database or AI platform. It also means that access rules can be applied directly to users and AI agents.

Notably, Oracle’s April 2026 availability update claimed failover times below 30 seconds for its Platinum-level architecture and below three seconds for certain distributed configurations, showing that the service is gaining traction with lower and lower error rates.

Q4 Download

For Q4, Oracle delivered year-over-year (YOY) growth in both revenue and earnings while exceeding consensus expectations. Total revenue reached $19.2 billion, rising 21% from the prior year. Earnings per share advanced at a stronger pace of 24% to $2.11, comfortably beating the consensus estimate of $1.96 and marking the fourth consecutive quarter of outperforming profit forecasts. Alongside maintaining its prior revenue outlook of $90 billion for fiscal 2027, the company lifted its non-GAAP earnings per share guidance to $8.05.

Cash generation showed improvement as net cash from operating activities for fiscal 2026 totaled $32 billion, up from $20.8 billion in fiscal 2025. Oracle closed the fourth quarter with $31.3 billion in cash, well above its short term debt balance of $7.2 billion.

Remaining performance obligations, an important measure of future demand, surged to $638 billion. This represented a 363% YOY increase. A significant portion of this backlog, however, is tied to a single customer, OpenAI, which continues to consume substantial cash.

The report also contained some less favorable elements. Cloud revenue for the quarter came in at $9.91 billion, reflecting 47% YOY growth but falling short of the Street expectation of $9.99 billion.

To support its large-scale capital spending, more consistent positive free cash flow would be preferable. Free cash flow at the end of the fourth quarter stood at a negative $23.7 billion, meaning the company continues to rely on equity and debt financing. This raises questions about longer-term sustainability.

Oracle's downturn has brought the stock to trade at undervalued levels on some key valuation metrics. Its forward price-to-earnings ratio and price-to-cash-flow ratio of 19.40 times and 8.37 times are below the sector medians of 24.37 times and 20.85 times, respectively. Moreover, the forward price-to-sales ratio of 5.04 times is just above the sector median of 3.50 times.

Analyst Opinion On ORCL Stock

Overall, analysts have attributed to ORCL stock a rating of “Strong Buy”. The mean target price of $251.50 denotes potential upside of 67.1% from current levels. Out of 44 analysts covering the stock, 33 have a “Strong Buy” rating, one has a “Moderate Buy” rating, nine analysts have a “Hold” rating, and one has a “Strong Sell” rating.