Oracle (NYSE: ORCL) shares experienced a surge in after-hours trading following strong fiscal Q4 results and a more aggressive revenue forecast for FY26, positioning the company to capitalize on the growing enterprise AI market.

Q4 Financial Overview

• Adjusted EPS: $1.70 compared to $1.64 expected

• Revenue: $15.9 billion versus $15.58 billion consensus

• Oracle Cloud Infrastructure (OCI) revenue: Gained 62% YoY

• Remaining performance obligations: $138 billion, up 41% YoY

This performance surpassed expectations, showcasing a growing demand for Oracle’s cloud services, particularly with enterprises increasing AI deployment.

FY26 Growth Forecast: Revenue Steps Up

CEO Safra Catz projected a target of at least $67 billion in FY26, which implies a 16.7% annual growth, an increase from the previous 15% estimate. A significant part of this growth is anticipated to come from Oracle Cloud Infrastructure and AI-focused initiatives.

• Total cloud growth (applications and infrastructure) expected to exceed 40%, compared to 24% in FY25

• However, growing capital expenditure levels suggest increased spending to support infrastructure demands

Market Sentiment Among Analysts

Analysts at KeyBanc noted that while investor skepticism remains, especially concerning Oracle’s historical follow-through, there is potential for interim gains even if long-term expectations falter. Jefferies emphasized that the $138 billion in remaining performance obligations indicates strong ongoing demand in the enterprise AI space.

Oracle’s Position in AI Infrastructure

Oracle’s shift towards services heavy on infrastructure with OCI and focus on AI-specific business requirements is redefining its financial outlook. However, this transition demands significant capex, an aspect investors must observe closely.