Should Investors Chase the Post-Earnings Surge In Oracle Stock?

Although Oracle ORCL posted mixed results for its fiscal first quarter on Tuesday evening, the cloud provider's infusion of AI products, services, and applications has wowed investors.Citing unprecedented demand for AI workloads, Oracle stock had surged more than +40% in today’s trading session, hitting a new all-time high of $345 a share. The move marked a $230 billion market cap jump, placing Oracle near the top 10 most valuable companies in the S&P 500, with a valuation now over $900 billion.Notably, the spike in ORCL has reportedly made Oracle chairman and Co-founder Larry Ellison the world’s richest person ahead of Tesla TSLA CEO Elon Musk.That said, investors may certainly be wondering if they should chase the post-earnings surge in Oracle stock, which is now up nearly +500% in the last five years.Image Source: Zacks Investment Research Oracle’s Q1 Results & Bullish AI OutlookAttributed to AI cloud infrastructure demand, Oracle’s Q1 sales rose 12% year over year to $14.92 billion, although this slightly missed estimates of $15.01 billion. Enticing bullish sentiment, Oracle's Cloud Infrastructure (OCI) revenue soared 54% year over year to $3.3 billion. Able to reach earnings expectations, Oracle posted Q1 EPS of $1.47, a 6% increase from $1.39 per share in the comparative quarter.However, what fueled the extensive rally in ORCL shares is that Oracle unveiled a record $455 billion backlog, reflecting lucrative cloud contracts with AI players like Elon Musk’s xAI venture, OpenAI, Meta Platforms META, Nvidia NVDA, and AMD AMD. Furthermore, Oracle projects AI-driven cloud revenue to hit $144 billion by 2030, placing the expansion of its cloud services in an elite realm with big tech giants such as Amazon AMZN and Microsoft MSFT. In fact, Oracle's expectation of an acceleration in cloud infrastructure expansion has been lifted by a new multi-cloud deal with Amazon’s AWS.While Oracle didn’t issue any formal upward guidance to its top or bottom line targets, the company reiterated strong double-digit revenue growth for its current fiscal 2026, with CEO Safra Catz emphasizing its record backlog as the catalyst. Oracle’s Aggressive AI ExpansionOffering AI across its flagship Software as a Service (SaaS) platforms, Oracle has embedded generative AI and agentic AI into its application suites to streamline operations for businesses and developers. This has also positioned Oracle as a leader in AI inferencing, using trained models to generate insights and automate decisions.  With its infrastructure becoming a go-to destination for training and running large AI models, Oracle plans to spend $35 billion on capital expenditures in FY26 to build out data centers and meet demand. This comes as Oracle's cloud infrastructure client base has called for the company to produce as much capacity as possible.   Monitoring Oracle’s ValuationFollowing today’s rally, ORCL is trading at 35.8X forward earnings, which is not an overly stretched premium to its Zacks Computer-Software Industry average of 26.8X and the S&P 500’s 25X. Like most high-growth tech stocks, Oracle trades at a lofty valuation in terms of price to forward sales at 10.1X, but this is not a far stretch from the industry average and the S&P 500’s average of around 5X, respectively.Image Source: Zacks Investment Research Bottom LineRearchitecting its entire ecosystem around AI, Wall Street analysts are calling Oracle’s transformation one of the most dynamic pivots in enterprise history. After such a sharp post-earnings spike, Oracle stock currently lands a Zacks Rank #3 (Hold), but it wouldn’t be surprising if a buy rating is on the way as earnings estimate revisions are likely to trend higher in the coming weeks, given the company’s bullish outlook.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oracle Corporation (ORCL): Free Stock Analysis Report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks