Can a $7-billion defence order rescue Oracle shares?

The one software stock that has taken the most hit in the year 2026 amid the ongoing tech selloff is Oracle Corp.

Shares of the software company are down about 39% from the start of the year and more than 50% over the past 12 months. In comparison, tech-heavy Nasdaq 100 is up 13% year-to-date and 23% in the past one year.

Investors have been worried about Oracle’s massive spending plans to build AI data centers. The software company has estimated roughly $90 billion to $95 billion in gross capital spending for fiscal 2027.

But just when the stock seemed to have hit a rock bottom, hovering around its 52-week low, a $7-billion defence order from the US Department of War has turned around the sentiment for the company.

On Thursday, the Pentagon announced that Oracle has been awarded a 10-year enterprise software agreement worth up to $7 billion to consolidate software licensing across the US military.

The deal is the first direct award contract with Oracle covering the Department of Defence’s on-premises Oracle usage.

The deal, negotiated by the Department of the Navy, supports the entire Department of War, as well as the Coast Guard and the Intelligence Community.

The contract carries a base value of $3.31 billion covering an initial five-year ordering period, with unexercised option years potentially expanding total cumulative spending to $6.99 billion over a decade.

“This nearly $7 billion agreement with Oracle strengthens our digital ecosystem, supporting our warfighters with secure, scalable technology to dominate current and future missions,” said Kirsten Davies, chief information officer for the Defence Department.

How does Oracle benefit from this deal?

Securing such a huge defence enterprise software agreement provides long-term revenue visibility to Oracle and acts as a growth catalyst at a time when software providers are facing macroeconomic scrutiny on fears that rapid AI automation could render traditional software business models obsolete.

Analysts are also viewing the multi-billion-dollar framework of the deal as a key tailwind for Oracle’s public sector trajectory as defence agencies increasingly prioritize flexible, high-security enterprise technology.

In overnight trade on Thursday, Oracle shares jumped as much as 3% after the Pentagon announcement.

Now, the next real test for the stock would be on September 10 when Oracle reports first-quarter fiscal 2027 results.