Oracle's RPO rally is a sight to behold, shares up 40%

Oracle wows Wall Street with $455 billion in remaining performance obligations.
Oracle expects fiscal 2030 Cloud Infrastructure revenue to reach $144 billion.
ORCL rallies as much as 40% despite double miss in Q1.
PPI inflation for August arrives well below consensus.

Clay Webster FXStreet

It's 15 minutes into trading on Wednesday morning, and Oracle (ORCL) is trading like a penny stock. Despite missing fiscal first-quarter consensus on both the top and bottom lines, ORCL shares have risen as much as 40% on an unexpected explosion in remaining performance obligations (RPOs).

RPOs are projected future revenue based on signed contracts, and this figure has risen 359% in fiscal Q1 from a year earlier at Oracle.

Oracle stock has surged from Tuesday's close at $241.51 to a high above $339 on Wednesday, adding some $266 billion in market cap in the process.

The wider market is mixed after the Producer Price Index (PPI) for August arrived during the premarket on Wednesday well below consensus. The Dow Jones Industrial Average (DJIA) has given up 0.2%, while the S&P 500 is up nearly half a percentage point. The NASDAQ has risen about 0.3% at the time of writing.

Oracle astounds with long-term revenue outlook

Oracle's RPOs are almost too good to be true.

“We signed four multi-billion-dollar contracts with three different customers in Q1,” said Oracle CEO Safra Catz. “This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter—and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars."

Oracle now expects Cloud Infrastructure to grow 77% this fiscal year (fiscal 2026) to $18 billion. From there it is projected to rise to $32 billion in fiscal 2027, $73 billion in fiscal 2028, $114 billion in fiscal 2029, and $144 billion in fiscal 2030.

The extreme growth in cloud revenue stems from an enormous buildout in AI data centers as Oracle becomes a key player in the industry. It was already previously known that Oracle was a central figure in US President Donald Trump's Stargate Project, a $500 billion plan to build the world's AI-focused data centers throughout the United States. But no analyst expected Oracle's revenue to surge at this steep incline.

For the fiscal first quarter, Oracle earned $1.47 in adjusted earnings per share (EPS) on revenue of $14.93 billion. The EPS figure was a penny below the Wall Street consensus, and revenue missed projections by $110 million. Revenue for the quarter rose 12% from a year earlier, but Cloud revenue rose 28% YoY, and Cloud Infrastructure revenue jumped 55% in that time period.

Oracle stock forecast

It is extremely rare for a large cap stock to rally this much in a single session, but Oracle has done it. ORCL shares have risen through the 261.8% Fibonacci Retracement and now take aim at the 361.8% Fibo near $371.

The danger in a rally of this magnitude is that no real support structures exist nearby. The 50-day Simple Moving Average (SMA), for instance, is all the way down at $242. The only possibility is the 161.8% Fibo just below $287, but that level is now 15% below Wednesday's price level.

ORCL daily stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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