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Oracle’s shares climbed 9 per cent on Tuesday after the database group posted better than expected earnings and gave a robust forecast for next year’s revenue as it pursues a big bet on AI data centres.
Oracle, co-founded by Larry Ellison, said revenues in its fiscal third quarter rose 22 per cent year on year to $17.2bn, beating Wall Street forecasts of $16.9bn.
Cloud revenue for the Austin-based group came in above expectations at about $8.9bn in the quarter. The stock rose in after-market trading.
It also raised its forecast to $90bn in revenue in its 2027 fiscal year, ahead of market expectations.
Oracle credited strong “demand for cloud computing for AI training and inferencing” with helping it “comfortably meet and likely exceed our revenue growth rate forecast for FY27 and beyond”.
“Some of the largest consumers of AI cloud capacity have recently strengthened their financial positions quite substantially,” it added, after customers OpenAI and xAI secured fundraising deals in the quarter.
Oracle has launched an aggressive push to compete with larger rivals such as Amazon and Microsoft to supply computing power to AI companies.
It struck a huge deal last year with OpenAI but has faced growing concern about its reliance on the ChatGPT maker as a customer and a big increase in borrowing — with its shares down more than 50 per cent since their peak last autumn.
Its long-term debt, including operating leases, rose to $143bn while its capital expenditures in the quarter increased more than 50 per cent to $18.6bn — more than analysts’ estimates compiled by Visible Alpha.
Oracle stuck with a forecast of $50bn in capex for the current fiscal year.
Total bookings for future revenue, known as remaining performance obligations, increased to $553bn in the three months to the end of February, while net income was broadly in line with expectations at $3.7bn.
Oracle said it has been “restructuring” its software engineering teams because AI coding tools will allow them to “build more software in less time with fewer people”.
Analysts expect the group to undertake lay-offs and sell some of its business units to support its AI investment push. Oracle has drawn down roughly $961mn from a $1.6bn pot it set aside at the start of the fiscal year to help fund payments to employees whose jobs are cut.
Oracle has moved in recent months to assure investors that the vast projects it has committed to build are on track despite concerns that some sites are slipping behind schedule because of financing and regulatory hurdles.
The FT in December reported a crucial financial partner would not back a site in Michigan. The state’s attorney-general has also moved to have regulators revisit that site’s power plans.
Oracle’s shares were hit by reports last week that OpenAI would not take up an option to expand its contract at a data-centre campus in Abilene, Texas.
The company has insisted its projects remain on track. Oracle last month raised $25bn through a blockbuster bond offering to help finance various data centres.
