Oracle Repeats 2026 Outlook, Signs $1.5B AI Contract With a Cloud Provider

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Oracle

reiterated its previous forecast that it will reach $65 billion in revenue by the company’s May 2026 fiscal year.

Speaking at a meeting with stock analysts in Las Vegas where the company is holding its annual Oracle Cloud World conference, Oracle (ticker: ORCL) Executive Vice President for Corporate Operations Doug Kehring repeated the company’s forecast for $65 billion in revenue, 45% operating margins and at least 10% annual earnings per share growth by FY 2026. “We remain confident we are on track to meet those targets,” he said.

Kehring noted that Oracle has projected 8% revenue growth for fiscal 2024 excluding the company’s Cerner electronic health records business, or 7% including Cerner. He said that non-GAAP operating margin for FY 2024 should reach 43%, up a percentage point from 42% in fiscal 2023.

During a Q&A session, Oracle CEO Safra Catz was asked about the selloff of the company’s shares following the company’s recent earnings announcement, which included the largest one-day decline in the stock in two decades. Catz said she sees the drop as an opportunity to repurchase stock. “We continue to go private one share at a time,” she said. “I can never outguess the market.” 

Catz added that demand for capacity in the company’s cloud computing business remains robust. “We are overwhelmed by demand…we’re really happy here. People cannot get to us fast enough. That’s what’s happening. We’ve very satisfied about how we’re playing out the year.”

Oracle founder and Chief Technology Officer Larry Ellison also answered questions at the event. He was asked about his confidence that the company can reach its FY 2026 forecast.

“My goals are much different than that,” Ellison said. “I mean much, much different than that.” He notes that a few years ago, the company’s largest customer paid Oracle about $120 million a year. “Now I would say it would be an odd quarter without signing a single deal over a billion dollars,” he said. “We now have multiple billion dollar customers.”

Ellison noted that Oracle signed a $1.5 billion contract to do AI training in the cloud with one of the three large cloud computing vendors—either

Amazon
,

Microsoft

or Alphabet—“because our prices were lower than their costs.” Ellison noted that Oracle says that it does AI training twice as fast as other clouds at half the price. “Actually it is better than that, much, much better than that,” he said. “There really is no end in sight for all of this.”

Ellison was also asked about whether the company is able to get enough GPU chips from Nvidia to continue to expand its cloud computing business. In response, he told a brief story about a recent dinner he had at Nobu in Palo Alto with Nvidia CEO Jensun Huang and Tesla CEO Elon Musk. He says that he and Musk spent the evening eating sushi and “begging.” He said that while Oracle is “ahead of everybody,” there are still “not nearly enough” chips available.

Amid a deep selloff in tech shares on Thursday, Oracle fell 3.1% to $109.43.

Write to Eric J. Savitz at eric.savitz@barrons.com