Oracle (ORCL, Financial) has announced the signing of a landmark cloud computing service contract worth up to $30 billion annually, surpassing the current scale of its entire cloud infrastructure business. This news propelled Oracle's stock to rise by as much as 8.6% during trading, reaching an intraday record high before closing up nearly 4%. Oracle's stock has increased approximately 32% this year.
The revenue from this contract is expected to start flowing into Oracle's accounts in the fiscal year 2028, although the client's identity remains undisclosed. Oracle's CEO, Safra Catz, highlighted the strong start to the company's fiscal year 2026, noting multiple large cloud service agreements and continued over 100% growth in Oracle database revenue on other cloud platforms.
This $30 billion contract is one of the largest in cloud computing history, potentially tripling Oracle's current infrastructure business size. Over the past four quarters, Oracle's cloud infrastructure revenue totaled $10.3 billion. In comparison, the U.S. Department of Defense awarded a $9 billion cloud contract in 2022, shared by four companies including Oracle. Previously, Microsoft (MSFT) had a $10 billion cloud contract, which was later reallocated after legal challenges.
Oracle is solidifying its position in the competitive cloud market by attracting AI-focused clients. The company has partnered with OpenAI to form a joint venture, Stargate, to provide large-scale computing capabilities, although this deal has yet to impact financial statements or order backlogs. Analysts suggest this contract could enhance Oracle's cloud market share and increase capital expenditure in the coming years.
