By Juby Babu and Stephen Nellis
March 10 (Reuters) – Oracle on Tuesday predicted that the AI data center boom will power its revenue above Wall Street estimates well into 2027, sending its shares up 8% in extended trading.
The results help to allay investor concerns that Oracle’s costly multi-billion dollar push into AI computing would not generate profits quickly enough.
Remaining performance obligations (RPO), a key indicator of future contracted revenue, grew 325% from last year to $553 billion, ahead of the $540.37 billion estimate from four Visible Alpha analysts.
Most of the increase in RPO in the quarter is related to large-scale AI contracts where Oracle “does not expect to have to raise any incremental funds,” the company said in a statement.
The company also raised its revenue forecast for fiscal 2027 to $90 billion, above analyst estimates of $86.6 billion, according to LSEG-compiled data.
“Oracle’s quarter is a beat and a stress test result for the AI trade,” said eMarketer analyst Jacob Bourne. “As the most debt-exposed major player in AI infrastructure, Oracle is the canary in the coal mine and this report suggests there’s underlying health in AI spending beyond the hype.”
Long known for its database software and enterprise applications for finance, Oracle in recent years has repositioned itself as a cloud computing infrastructure competitor after recruiting key executives from rivals.
The company’s strategy to build out data centers is helping it capture a slice of the booming AI market. Oracle has been aggressively spending to expand its cloud infrastructure to support generative AI workloads, competing for customers against hyperscalers such as Amazon’s AWS and Microsoft’s Azure.
Oracle also said that it has been restructuring its product development teams, as new AI code generation technology enables it to build more software in less time with fewer people.
The company reported total revenue of $17.19 billion for the quarter, compared with analysts’ average estimate of $16.91 billion, according to data compiled by LSEG.
For its current fiscal fourth quarter, Oracle predicts adjusted profits between $1.96 and $2.00 in U.S. dollars, above analysts’ estimates of $1.94 per share.
The company expects fiscal fourth-quarter revenue growth of 19% to 21% in U.S. dollars, in line with analysts’ estimates of 20.2% growth to $19.12 billion. Similarly, Oracle forecast cloud revenue growth of 46% to 50% in U.S. dollars, also in line with estimates of 48% growth to $9.98 billion, according to LSEG data.
(Reporting by Juby Babu in Mexico City; Editing by Alan Barona)
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