Oracle’s (ORCL) cloud business continues to get more takers as Stifel Financial Corporation gave a bullish call on the stock.
Cloud acceleration supports long-term outlook
Oracle’s strong performance in the cloud sector has prompted Stifel to upgrade the software giant’s stock rating from “Hold” to “Buy,” reflecting growing confidence in the company’s long-term trajectory.
Analyst Brad Reback raised his price target from $180 to $250 per share, implying a potential upside of around 19% from Friday’s close.
This bullish stance comes on the heels of a standout year for Oracle in 2025, with shares already up 26% year-to-date.
Reback believes that the recent gains are not a temporary surge, but part of a broader trend of sustainable cloud growth.
He forecasts that Oracle’s total cloud revenue — which includes both infrastructure and software-as-a-service (SaaS) applications — could increase in the high 30% range annually for each of the next two fiscal years.
“Upgrade to Buy as the recent dramatic step-up in capex and RPO gains support management’s Cloud (Infrastructure + SaaS-Apps) growth expectations,” Reback wrote, adding that these improvements should translate into accelerating total revenue growth of approximately 16% in fiscal year 2026 and 20% in fiscal 2027.
In its fourth quarter results for 2025, Oracle reported a revenue jump of 11% to $15.9 billion, surpassing market expectations.
The cloud services and license support segment increased by 14% to $11.7 billion.
In another positive development for the company, Oracle CEO Safra Catz has indicated a robust commencement to fiscal year 2026, driven by sustained expansion within the company’s cloud operations.
An SEC filing reveals that Catz intends to inform colleagues of Oracle’s MultiCloud database revenue maintaining a growth rate exceeding 100%.
Revenue efficiency through capital spending
The shift toward increased capital expenditure, particularly in physical infrastructure, is seen as a strategic move that reduces Oracle’s dependence on workforce expansion.
According to Reback, this approach will likely generate revenue growth at a pace that outstrips operating expenses in the years ahead.
While higher capex is expected to compress gross margins in the short term, Reback expressed confidence in Oracle’s management.
“There is no question this management team is extremely adept at managing expenses,” he noted.
The company’s total revenue rose 8% last year, while headcount and overall operating expenses grew by just 2% and 5%, respectively — a sign of improved cost control and operational efficiency.
Oracle’s strategy to prioritize infrastructure over hiring is expected to shift the business model away from relying on additional personnel to drive growth. This reorientation could lead to more scalable and profitable expansion in the long term.
Path toward accelerating earnings growth
Looking further ahead, Reback anticipates that this mix of disciplined spending and cloud-led growth will begin to reflect in Oracle’s earnings performance by 2027.
The analyst expects the company to post accelerating earnings growth as it capitalizes on its investments and improves operating leverage.
Oracle shares rose by 7% in the pre-market, suggesting that the market has responded positively to the renewed outlook.
As the company continues to invest in its cloud capabilities while maintaining tight control over expenses, investors may find its long-term growth story increasingly compelling.
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