Oracle’s fourth quarter saw strong year-on-year sales growth, but results came in below Wall Street’s revenue expectations and the market responded negatively. Management attributed the performance to surging demand for cloud infrastructure, driven by large-scale AI and enterprise workloads. CEO Mike Cecilia noted that Oracle’s cloud business now represents half of total revenue, with cloud infrastructure revenue up 66%. Despite this, the company faced scrutiny over the capital intensity required to support rapid growth and the sustainability of margins.
Is now the time to buy ORCL? Find out in our full research report (it’s free for active Edge members).
Oracle (ORCL) Q4 CY2025 Highlights:
- Revenue: $16.06 billion vs analyst estimates of $16.19 billion (14.2% year-on-year growth, 0.8% miss)
- Adjusted EPS: $2.26 vs analyst estimates of $1.64 (38% beat)
- Adjusted Operating Income: $6.72 billion vs analyst estimates of $6.81 billion (41.9% margin, 1.3% miss)
- Operating Margin: 29.5%, in line with the same quarter last year
- Billings: $13.9 billion at quarter end, up 15.8% year on year
- Market Capitalization: $542 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Oracle’s Q4 Earnings Call
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Brad Zelnick (Deutsche Bank) pressed on the capital required for Oracle’s AI-driven expansion. CEO Clay McGork explained that flexible funding models, including customer-owned hardware and vendor leases, will reduce the need for large-scale borrowing, aiming to stay well below $100 billion in new financing.
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Ben Reitzis (Melius Research) asked about OCI margin ramp timelines. McGork replied that OCI margins are expected to reach 30–40% as capacity comes online, with the biggest variable being the global mix and speed of data center buildouts.
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Tyler Radke (Citi) inquired about upselling database and middleware services to AI infrastructure customers. Chairman Lawrence Ellison described how Oracle’s multi-cloud and AI database strategy enables unified, secure data access, aiming to “turbocharge” adoption across the portfolio.
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Brent Thill (Jefferies) questioned the fungibility of data center capacity if large customers default. McGork said Oracle’s technology allows for rapid reallocation of resources, often within hours, due to standardized infrastructure and strong customer demand.
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John DiFucci (Guggenheim Securities) probed the confidence in accelerating applications growth despite peers seeing slowdowns. CEO Mike Cecilia cited Oracle’s complete suite approach, embedded AI, and combined sales teams as key differentiators driving higher deferred revenue and customer upgrades.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will closely monitor (1) the pace of cloud infrastructure rollout and its impact on revenue conversion, (2) the success of cross-selling strategies and accelerated application upgrades, and (3) management’s execution on capital allocation and margin improvement as data center investments scale. Additional focus will be on the adoption of AI-powered solutions in healthcare and the evolution of Oracle’s multi-cloud ecosystem.
Oracle currently trades at $187.78, down from $223.95 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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