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Oracle: Oracle's Q2 FY 2026 Earnings: A Strong Showing in Cloud and AI

Oracle Corporation reported a robust Q2 FY 2026, with total revenues reaching $16.1 billion, a 13% increase from the previous year. Total cloud revenue was a highlight, growing 33% to $8 billion, driven by a 66% surge in cloud infrastructure revenue to $4.1 billion and an 11% increase in cloud applications revenue to $3.9 billion. The company's operating income grew 8% to $6.7 billion, and non-GAAP EPS was $2.26, a 51% increase, significantly beating estimates of $1.64. The strong EPS performance was accompanied by a pretax gain of $2.7 billion from the sale of its interest in Ampere, contributing to the overall financial success.

ORCL

USD 192.4

6.87%

A-Score: 4.9/10

Publication date: December 10, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Cloud Infrastructure Surge Cloud infrastructure revenue jumped 66% to $4.1 billion, outpacing cloud applications' 11% growth to $3.9 billion.
  • Historic RPO Growth Remaining Performance Obligations soared 433% to $523.3 billion, reflecting strong future revenue visibility.
  • AI-Driven Profitability AI workload margins for OCI are projected to reach 30-40%, with rapid capacity scaling to boost margins.
  • Accelerating Applications Growth Fusion ERP, SCM, HCM, and CX grew 17-18%, with 330 cloud apps go-lives and 14% deferred revenue growth.
  • EPS & Guidance Expansion Non-GAAP EPS surged 51% to $2.26, while FY 2026 revenue guidance reached $67 billion with $15 billion added to CapEx forecasts.

Cloud and AI Momentum

The company's cloud business continues to gain momentum, with Remaining Performance Obligations (RPO) ending the quarter at $523.3 billion, up 433% from the previous year. Oracle's AI data platform is a key differentiator, allowing customers to quickly gain value from enterprise-grade AI by combining industry-leading foundational models with company-specific proprietary data. The platform's ability to tie in non-Oracle applications, competitive data sources, and unstructured data is enabling customers to build enterprise lake houses, AI agents, and applications with built-in AI, as seen in the deal with Tim Brazil, which signed a five-year expansion to accelerate AI adoption.

Financial Outlook and Guidance

Oracle expects full-year FY 2026 revenue of $67 billion and has increased its fiscal 2026 CapEx forecast by about $15 billion. For Q3, total cloud revenue is expected to grow 37-41%, and total revenues are expected to grow 16-18%. Non-GAAP EPS is expected to grow 12-14%. The company's guidance suggests continued strong growth in its cloud business, driven by its AI capabilities and infrastructure.

Valuation and Growth Prospects

With a P/E Ratio of 35.49 and an EV/EBITDA of 28.74, Oracle's valuation reflects its strong growth prospects. Analysts estimate next year's revenue growth at 17.3%, indicating a continued upward trajectory. The company's ROIC of 9.36% and ROE of 67.22% demonstrate its ability to generate returns on its investments. Oracle's AI infrastructure and applications business are expected to drive future growth, with the company poised to capitalize on the increasing demand for AI solutions.

Applications Business Acceleration

Oracle's applications business is expected to accelerate this year, driven by its unique position offering complete application suites with baked-in AI. Over 400 AI features are live in Fusion, and customers are implementing AI agents quickly. The company's growth rates in industry applications are strong, with Fusion ERP up 17%, SCM up 18%, HCM up 14%, and CX up 12%. Deferred revenue for apps grew 14%, outpacing in-quarter revenue growth of 11%, supporting optimism for the apps business going forward.

Oracle's A-Score