TLDR
- Oracle stock is down almost 20% in 2025 so far
- Q3 revenue of $14.13 billion (up 6.4% YoY) missed expectations by $259.18 million
- Cloud business revenue reached $6.2 billion, up 23% YoY with IaaS surging 49%
- Oracle increased quarterly dividend by 25% to $0.50 per share
- Top investor Gary Alexander calls dip a buying opportunity, with Wall Street setting average price target of $182.32 (35% upside)
Oracle Corporation has faced a challenging start to 2025, with its stock declining nearly 20% year-to-date.
The tech giant has been caught in broader market pressures affecting the technology sector, including tariff concerns and fears of a global economic slowdown.
The company’s most recent financial results have contributed to investor caution. In its fiscal 2025 third quarter report released in March, Oracle posted revenue of $14.13 billion.
While this represented a 6.4% year-over-year increase, it fell short of market expectations by $259.18 million. The company’s earnings per share of $1.02 also missed analyst forecasts by $0.04.
Cloud Growth Remains Strong
Despite these challenges, Oracle’s cloud business continues to show robust growth.
The cloud segment, which includes Infrastructure as a Service (IaaS) and Software as a Service (SaaS), generated $6.2 billion in revenue during the quarter.
This represents a 23% increase compared to the same period last year when measured in US dollars.
IaaS revenue was particularly impressive, surging 49% to reach $2.7 billion.
Oracle has established cloud partnerships with major tech companies including OpenAI, xAI, Meta, NVIDIA, and AMD.
These strategic alliances are helping to drive the company’s cloud expansion. With a substantial sales backlog of $130 billion, Oracle expects to achieve 15% total revenue growth in its upcoming fiscal year starting in June.
The company’s cash position remains strong. Oracle reported $20.7 billion in operating cash flow and $5.8 billion in free cash flow over the past 12 months.
At the end of the quarter, the company had $17.4 billion in cash and equivalents on its balance sheet.
Dividend Growth Attracts Investors
Oracle has proven itself as a reliable dividend payer, consistently distributing dividends since 2009.
In March, the company announced a 25% increase to its quarterly dividend, raising it to $0.50 per share.
As of April 12, Oracle stock offers a dividend yield of 1.51%.
This dividend growth strategy aligns with broader market trends.
According to market data, dividend-paying stocks have historically delivered superior long-term returns.
Between 1960 and 2024, a $10,000 investment in the market index would have grown to over $982,000 based on stock price appreciation alone.
However, when dividends were reinvested over that same period, the investment would have ballooned to approximately $6.42 million by early 2025.
Gary Alexander, a top-ranked investor, views Oracle’s recent stock price decline as a buying opportunity.
“Already one of the world’s most dominant software companies, the company has built up a massive deferred revenue backlog that is pre-empting a sharp acceleration in revenue next year,” Alexander notes.
Alexander highlights Oracle’s broad product portfolio as a key advantage.
The company offers much more than just database software, with cloud applications spanning sales, finance, and other business functions.
This comprehensive offering gives Oracle an edge over smaller competitors, especially in an environment of tightening IT budgets.
Demand for Oracle’s database services has been growing, particularly in AI-related applications. Alexander points out that GPU consumption for AI model training on the Oracle platform has more than tripled over the past year.
Looking ahead, Oracle expects to nearly double its revenue growth rate in the next fiscal year, thanks to its substantial sales backlog.
The company has provided guidance for 20% growth in fiscal year 2027, suggesting continued acceleration in the coming years.
Wall Street appears to share this optimistic outlook. Oracle currently has 15 Buy ratings and 13 Hold ratings from analysts, resulting in a Moderate Buy consensus.
The average 12-month price target stands at $182.32, suggesting a potential upside of approximately 35% from current levels.
