Oracle exceeded Wall Street's third-quarter revenue estimates, with its shares climbing nearly 7% in extended trading. This surge is attributed to robust demand for its cloud computing services, fueled by the artificial intelligence boom.
The company's results address investor concerns about the profitability timeline for its significant AI computing investments. Remaining performance obligations (RPO), a crucial metric for future contracted revenue, saw a substantial 325% year-over-year increase, reaching $553 billion, surpassing analyst expectations. Much of this RPO growth stems from large-scale AI contracts where Oracle anticipates no need for additional funding.
Having transitioned from its legacy database software, Oracle has aggressively expanded its cloud infrastructure to compete in the burgeoning AI market. The company is investing heavily to support generative AI workloads, challenging hyperscalers like Amazon AWS and Microsoft Azure.
Oracle also revealed restructuring of its product development teams, leveraging new AI code generation technology to accelerate software development with reduced staffing. The company has raised its fiscal 2027 revenue forecast to $90 billion, exceeding prior analyst estimates. Total revenue for the quarter hit $17.19 billion, surpassing the $16.91 billion average analyst estimate.