Bernstein Report: Oracle Cloud Revenue Exceeds Alibaba Cloud; AI Data Centers to Drive FY27 Growth

According to Chaoxiang Research and a Bernstein report dated September 2, Oracle OCI Gen 2 achieved revenue of $18.1 billion in FY26, representing a 77% year-over-year growth—accelerating from the 50% growth rate in FY25—and has now surpassed Alibaba Cloud, ranking second only to AWS, Azure, and Google Cloud. Bernstein maintains an Outperform rating with a price target of $325, implying a 130% upside from the current stock price. Capital expenditures for FY26 are $55.6 billion, with an estimated $92.8 billion for FY27. AI data center-related revenue is approximately $6.6 billion, accounting for 36% of OCI’s total revenue. Bernstein believes market concerns over OCI’s profitability and cash flow needs are overstated, as Oracle’s core businesses—databases, Fusion ERP, and NetSuite—are generating robust cash flows sufficient to fund AI data center capital expenditures. Sovereign cloud is another underappreciated growth driver, with the multi-cloud database strategy continuing to advance. In FY26, software revenue reached $58.5 billion (+19%), with cloud business accounting for 58% of total revenue and an operating margin of 42.9%. Operating profit is expected to rise to $37.9 billion in FY27.