What's happening at Oracle really?

Oracle, everyone’s least favorite software and infrastructure company, claims inroads into the cloud market through its Oracle Cloud Infrastructure (OCI). Financials for the licensing company with a software/cloud division sound good. The most recent quarter saw total cloud revenue (IaaS and SaaS) surge 34 percent, with cloud infrastructure (fka IaaS) jumping 68 percent, largely fueled by AI demand.

Except everyone’s buying GPUs, some in circular deals whereby a chipmaker (Nvidia) or cloud provider (Oracle) promises massive investment in the AI startup (OpenAI) or equity/warrants or guaranteed capacity. Then, the AI startup uses investment capital for trillions in purchases of the supplier's products—Nvidia GPUs in OCI.

When AWS or Google Cloud report segment revenue, they report IaaS and PaaS, core compute, storage, and networking services. These are purely consumption-based players. Meanwhile Microsoft breaks out Azure vs. server revenue growth in its “intelligent cloud” ($30.9 Billion in Q3 2025, but the company only breaks out growth).

Oracle, however combines three elements into its cloud revenue:

1. Cloud cloud (infrastructure and applications): OCI, which is growing rapidly due to AI demand, and enterprise applications, such as Fusion ERP and Cerner.
2. On-premise software support: Noncloud, annuity revenue from traditional, legacy software licenses.

While Oracle now breaks out total cloud revenue, this figure includes both infrastructure and applications, mixing a 68 percent commodity growth business (IaaS) with an 11 percent product business (SaaS). Further, legacy on-premise software support revenue—which reached nearly $5 billion last quarter—is also often lumped in when assessing Oracle’s cloud strength. This blending of legacy support contracts with nascent cloud growth inflates overall segment figures. Is that an accident?

Then, Oracle's focus on cloud applications, such as Fusion ERP and NetSuite isn’t a direct comparison for its IaaS rivals. While Oracle’s applications are profitable, they are largely competing in a mature market against established vendors like SAP and Workday. Oracle points to a step‑function increase in remaining performance obligations (RPO), up 438 percent year-over-year to $523B in Q2 FY26, reflecting multiyear AI capacity commitments.

Oracle makes the exact systems to provide investors, clients, and the public better information. Maybe they just don’t work that well.