Once a pretty sleepy stock, Oracle (ORCL 2.60%) has become a lightning rod in the age of artificial intelligence (AI). This stems from both the company’s aggressive spending on cloud computing, as well as it being a leading provider of software-as-a-service (SaaS) solutions.
While the stock has been on a roller coaster ride over the past year, particularly around its earnings announcements, it got a nice lift last week when the company reported strong fiscal 2026 third-quarter results. The stock is now trading up around 15% over the past year, as of this writing, but down 15% in 2026.
Let’s take a closer look at Oracle’s results to see if it is a good time to buy the stock.
Image source: The Motley Fool.
Margins are key for Oracle
With a huge cloud computing backlog, there was never much of a question whether Oracle could accelerate its revenue growth. The biggest question was what type of return the company could get on its data center spending. It helped answer that question with its fiscal Q3 results.
For the quarter, Oracle’s revenue jumped by 22% year over year to $17.19 billion, which easily topped the $16.91 billion analyst consensus, as compiled by LSEG. Cloud revenue soared 44% to $8.9 billion. Within the cloud segment, cloud infrastructure revenue surged by 84% to $4.9 billion, while cloud application revenue rose by 13% to $4 billion. Software segment revenue edged up 3% to $6.1 billion.
Adjusted earnings per share (EPS) climbed 21% year over year to $1.79. That came in above the $1.70 analyst consensus.
While its cloud computing gross margins are much lower than those for software, the company said the additional capacity it added in fiscal Q3 had gross margins above its 30% to 32% guidance range. That’s important, as it shows Oracle can get a nice return on its AI infrastructure spending. With a massive $553 billion in cloud computing signed contracts, up 325% year over year, getting a good return on its AI data center investments is a very important part of Oracle’s growth story.
Looking ahead, management kept its fiscal-year forecast for revenue of $67 billion. For its fiscal Q4, it guided for revenue to increase by 19% to 21% and for cloud revenue to jump by 46% to 50%. It anticipates its adjusted earnings per share will climb by 15% to 17% to a range of $1.96 to $2.00. Meanwhile, it now expects fiscal 2027 revenue of $90 billion.
Today’s Change
(-2.60%) $-4.13
Current Price
$155.03
Key Data Points
Market Cap
$446B
Day’s Range
$154.15 – $160.77
52wk Range
$118.86 – $345.72
Volume
1.1M
Avg Vol
29M
Gross Margin
64.30%
Dividend Yield
1.29%
Is Oracle stock a buy?
Oracle has a massive cloud computing backlog and just showed it can get a good return on its investments. That’s hugely important. Meanwhile, it defended the impact of AI on SaaS, saying SaaS companies that adopt AI will lead the charge and be the disruptors. This happens to be my general belief as well.
With the stock trading down more than half from its September 2025 highs, this looks like a good entry point for a company that is a more leveraged way to play the cloud computing boom.