Focusing on cloud and AI, the company is unlocking unprecedented growth.
The emergence of modern cloud computing is primarily AmazonIn 2002, he developed cloud infrastructure services with the introduction of Amazon Web Services (AWS). The industry has evolved over time, but the basics remain the same.
After a slow growth period, cloud infrastructure space has earned a jumpstart thanks to recent developments in the field of artificial intelligence (AI). However, large-scale language models that underpin technology require a lot of computational horsepower that is usually not available outside of data centers. As a result, demand for cloud infrastructure services has skyrocketed in recent years, and is expected to grow only from this point.
Recent developments suggest that there could be a big shakeup in cloud infrastructure spaces led by tech stubborns Oracle (orcl -5.05%)).
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Oracle Cloud demand skyrockets
Although the company is mostly known for its flagship Oracle database, it offers its customers a growing number of enterprise software, integrated cloud applications and cloud infrastructure services.
Oracle Cloud Infrastructure (OCI) has long been pushing out three big cloud providers. To close the second quarter of the calendar, visit AWS. Microsoft azure, and alphabetAccording to data compiled by Statista, Google Cloud controlled 30%, 20% and 13% of the market, respectively. Oracle ran far fifth in 3% of the market.
However, recent developments suggest a change in the current paradigm. When Oracle announced its results for the first quarter of 2026 (ends August 31st), the heading numbers were business as usual. Total revenues rose 11% year-on-year to $14.9 billion, while earnings per share (EPS) rose 6%.
But investors did I was surprised at the size of Oracle's backlog as a remaining performance obligation (RPO) or contractual obligation not yet included in revenue – This amounted to 359% year-on-year to $4550 billion. Perhaps even more impressive is the $317 billion deal signed in the first quarter alone.
Oracle's position as a trusted partner for Enterprise has become a “good place for AI workloads,” according to CEO Safra Catz. If that's not enough, she went on to say, “We're hoping to sign up some multi-billion dollar customers, and the RPO is likely to exceed $50 trillion.”
Broken backlog indicates that Oracle is enjoying the benefits of those transactions for years to come.
- Accounting 2026 Cloud revenue increased by $18 billion, 77%
- $32 billion in cloud revenue for 2027, up 78%
- Accounting 2028 Cloud revenues $73 billion, up 128%
- Accounting 2029 Cloud revenue increased by $114 billion, 56%
- Cloud revenues increased by $144 billion in 2030, up 26%
The company notes that there are contracts supporting these forecasts, as the majority of the revenue from this outlook is already booked through RPOs. If Oracle can reach these lofty benchmarks, if it's still a big thing, then OCI could join the big leagues of cloud infrastructure and remove one or more of the Big 3s.
Replacing security guards?
As mentioned earlier, Amazon, Microsoft, and Google are top of our list of cloud infrastructure providers, so it helps you see where they stand. During the first six months of 2025, AWS increased its revenue of $60.1 billion by 17%, suggesting a $120 billion run rate. Over the same period, Google Cloud revenues rose 30% to $25.9 billion, suggesting a run rate of around $51.8 billion. Microsoft generally does not beat Azure revenue, but recently revealed that in fiscal year 2025 (ends June 30th), Azure has grown 34% to surpass $75 billion.
Given the limitations, this is clearly not an apple vs. app comparison, but it provides a starting point. Get these extrapolated numbers and apply the latest growth rates over the next four years. Here, the Big 3 stands by the end of the 2029 calendar compared to Oracle.
- AWS: $22.5 billion
- azure: $24.1 billion
- Google Cloud: $157 billion
- Oracle: $144 billion
Assuming that using incomplete information, Oracle can turn RPOs into cloud revenue, this exercise shows the path OCI will challenge the Big Three in the next five years.
To be clear, this is a joyous thing with numbers, and life doesn't happen in a vacuum. All cloud infrastructure providers can grow faster or slower than the examples suggest. One emerging neoclaud provider can capture a large portion of the market. There are many other examples that can be very right or very wrong, but you can get ideas.
Should I buy it or not?
The recent spike in Oracle's stock price has had a reasonable impact on its valuation. The stock is selling at 38 times the revenues next year, which is certainly a premium. However, using a more appropriate forward price/revenue and growth (PEG) ratio that accounts for the company's growth trajectory, the multiple is 0.8.
Danny Vena has positions in Alphabet, Amazon and Microsoft. Motley Fool has jobs at Alphabet, Amazon, Microsoft, and Oracle and recommends. Motley Fool recommends the following options: A $395 phone at Microsoft for January 2026 length and a $405 phone to Microsoft for January 2026 short term. Motley Fools have a disclosure policy.
