Oracle has secured a 10-year software contract with the Pentagon worth up to $7 billion, causing its stock to rise 3%. The deal, which covers on-premises software for military and intelligence agencies, is projected by the Department of Defense to save taxpayers $441 million. The contract is a significant win for Oracle amid a 38% stock decline this year and its co-founder Larry Ellison's close ties to President Trump.
Pentagon software contract
- ▪A five-year base period for the contract includes perpetual and subscription-based software licenses, maintenance, and consulting
- ▪The Central Intelligence Agency was Oracle's first customer
- ▪The contract covers Oracle software for on-premises data centers used by military branches, the intelligence community, and the Coast Guard
- ▪The Pentagon awarded Oracle a software contract worth up to $7 billion over a decade on July 23, 2026
Oracle stock performance
- ▪In June 2026, Oracle reported that its quarterly software revenue declined 2% year-over-year, while cloud revenue climbed 47%
- ▪Oracle's stock rose about 3% in extended trading following the contract announcement
- ▪Oracle shares have declined 38% in 2026 as investors grew concerned that AI could hurt growth prospects for software incumbents
Trump-Ellison relationship
- ▪Oracle co-founder Larry Ellison has reportedly contributed $45 million to a nonprofit backing President Donald Trump's 2024 campaign
- ▪Larry Ellison was among the first guests to visit the White House during President Trump's second term
- ▪President Trump previously supported Oracle's effort to take a stake in TikTok's U.S. business
AI infrastructure investments
- ▪Oracle is accumulating tens of billions of dollars in debt to build out its AI data centers
- ▪In May 2026, the Defense Department announced agreements with Oracle and other tech companies for AI deployments in classified networks
- ▪During a White House visit, Larry Ellison announced plans for Stargate artificial intelligence data centers in the U.S.
Defense Department cost savings
- ▪Defense Secretary Pete Hegseth estimated the Iran war, which began in February 2026, has cost the U.S. $37.5 billion
- ▪The Department of Defense's chief information officer, Kirsten Davies, stated the Oracle contract saves taxpayers at least $441 million
- ▪The DoD attributed the savings to fundamental improvements in how it procures on-premises Oracle capabilities
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