Oracle projected Tuesday that the artificial intelligence data center boom will drive revenue beyond Wall Street estimates through 2027, leading to an 8% surge in its shares.
The company's performance addresses investor concerns regarding the profitability timeline for its substantial AI computing investments.
Remaining Performance Obligations, a critical metric for future contracted revenue, surged 325% year-over-year to $553 billion, surpassing analyst expectations. Oracle stated that most of this increase stems from large-scale AI contracts for which it anticipates no additional funding requirements.
The tech giant also elevated its fiscal 2027 revenue forecast to $90 billion, exceeding analyst predictions.
Analysts noted Oracle's report as a significant stress test for the AI sector, suggesting robust underlying spending beyond speculative hype, particularly given Oracle's prominent position in AI infrastructure.
Oracle, historically known for database software, has pivoted to cloud computing infrastructure, investing heavily to support generative AI workloads and compete with hyperscalers like AWS and Azure.
The company is also streamlining product development, leveraging AI code generation to enhance software creation efficiency.
Oracle reported quarterly revenue of $17.19 billion, exceeding analyst consensus. For the current fiscal fourth quarter, adjusted profit is forecast between $1.96 and $2.00 per share, above estimates. Revenue growth is expected between 19% and 21%, with cloud revenue projected to grow 46% to 50%.