The Oracle AI strategy is entering a new phase as Oracle Corporation (NYSE:ORCL) implements targeted layoffs within its Oracle Cloud Infrastructure (OCI) unit to redirect resources toward artificial intelligence expansion. The job cuts, impacting hundreds of employees in the U.S. and India, focus on Enterprise Engineering, Fusion ERP, and data center operations.
This restructuring is not a retreat from cloud services. Instead, Oracle is aggressively hiring AI-focused talent to enhance machine learning capabilities and build advanced data center infrastructure. The move mirrors actions by rivals Amazon.com (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOGL) as they balance escalating AI costs with long-term growth opportunities.
$30 Billion OpenAI Deal Underlines Commitment
A key element of the Oracle AI strategy is its $30 billion annual agreement with OpenAI, underscoring its push to become a dominant AI infrastructure provider. This requires massive capital reallocation to expand specialized computing facilities and deliver the high-performance systems demanded by AI workloads.
Oracle’s leadership sees AI as a generational opportunity. Chairman Larry Ellison noted that the company holds “most of the world’s valuable data” and is uniquely positioned to help enterprises deploy AI models securely on their proprietary datasets through Oracle 23 AI.
Strong Financial Results Back the Strategy
Oracle’s latest fiscal Q4 results showcased the strength of its AI-focused pivot. Cloud infrastructure revenue soared 52% to $3 billion, while total cloud revenue jumped 27% to $6.7 billion. CEO Safra Catz guided for over 70% cloud infrastructure growth in fiscal 2026, up from 51% in 2025, defying industry slowdowns.
The company’s remaining performance obligations (RPO) hit $138 billion, up 41% year-over-year, with expectations for over 100% growth in 2026. Demand has been so strong that Oracle is scheduling future delivery slots for customers, with some requesting “all the capacity you have wherever it is.”
Capital Expenditures and Multi-Cloud Advantage
The Oracle AI strategy includes boosting capital expenditures to more than $25 billion in fiscal 2026, primarily for revenue-generating data center assets. This figure could climb further given current demand levels.
Oracle’s multi-cloud partnerships—integrating its database-as-a-service with AWS, Microsoft Azure, and Google Cloud—are accelerating enterprise cloud migration. This flexibility helps Oracle maintain database dominance while tapping into AI-driven infrastructure modernization.
ORCL Stock Outlook and Valuation
With revenue guidance raised to over $67 billion for fiscal 2026 and management confident in surpassing fiscal 2029 goals, ORCL stock is positioned for long-term growth. Analysts expect revenue to jump from $57.4 billion in fiscal 2025 to $122 billion in 2030, while adjusted earnings per share could rise from $6.03 to $14.51.
Over the past five years, ORCL stock has returned more than 350% to shareholders. It currently trades at 36x forward earnings, above its 10-year average of 17x. Even at 30x earnings, analysts estimate it could reach $435 in three years, implying nearly 80% upside.
Of the 36 analysts covering the stock, 25 rate it a “Strong Buy,” one a “Moderate Buy,” and 10 a “Hold,” with an average target price of $248—slightly above its current $244 level.
Bottom Line: Playing ORCL in the AI Race
The Oracle AI strategy represents one of the most aggressive bets on AI infrastructure in the market today. By combining massive capital investment, strategic partnerships, and proprietary database technology, Oracle is positioning itself to be a long-term winner in the AI-driven cloud era.
For investors, ORCL stock offers both growth potential and competitive strength, though its premium valuation reflects high expectations. Those who believe in the AI infrastructure cycle may see the current price as an entry point into one of the sector’s most ambitious transformation stories.
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