TLDRs;
- Oracle shares jumped over 25% after announcing major cloud deals with OpenAI and Google.
- Remaining performance obligations surged 359%, signaling strong future revenue growth.
- Cloud infrastructure revenue projected to reach $144B by fiscal 2030, up from $10.3B.
- Despite earnings miss, Oracle’s AI and cloud contracts boost investor confidence.
Oracle Corporation (ORCL) saw its stock surge roughly 26% in after-hours trading on Tuesday following announcements of significant cloud infrastructure deals and AI partnerships.
The rally comes despite the company posting earnings and revenue slightly below Wall Street expectations for the latest quarter. Adjusted earnings per share came in at $1.47 versus the $1.48 forecast, while revenue totaled $14.93 billion, just shy of the $15.04 billion estimate.
Revenue increased 12% from the $13.3 billion recorded in the same quarter a year earlier, and net income remained steady at $2.93 billion, or $1.01 per share. Analysts and investors were encouraged, however, by Oracle’s strong forward-looking growth metrics and strategic collaborations with AI and cloud leaders.
Massive Cloud Deals Drive Investor Optimism
Central to Oracle’s rally was a reported surge in its Remaining Performance Obligations (RPO), a measure of contracted but unrecognized revenue. Oracle’s RPO jumped 359% year-over-year to $455 billion, highlighting substantial long-term revenue potential.
The company also confirmed multiple high-profile agreements, including a collaboration with OpenAI to develop 4.5 gigawatts of U.S. data center capacity and multibillion-dollar deals with three other major clients.
Oracle’s CEO, Safra Catz, emphasized that these agreements strengthen the company’s position in the booming AI and cloud markets, particularly as demand for high-performance computing grows alongside AI adoption.
AI Integration Accelerates Cloud Growth
Oracle has been increasingly integrating AI solutions into its cloud infrastructure, including support for OpenAI’s GPT-5 model and upcoming Oracle AI Database services.
Beginning in October, Oracle plans to launch a service that enables businesses to run AI models directly on their data stored within Oracle databases.
Additionally, Oracle announced that Google’s Gemini AI models will now be available on its cloud platform, further enhancing its AI capabilities and appeal to enterprise customers. This integration positions Oracle as a competitive player alongside major cloud providers such as Microsoft and Amazon, which reported cloud revenues of $75 billion and $112 billion, respectively, over the past 12 months.
Cloud Revenue Set for Explosive Growth
Oracle’s cloud infrastructure revenue continues to accelerate, generating $3.3 billion in the latest quarter, a 55% year-over-year increase.
The company forecasts cloud revenue to rise to $18 billion in fiscal 2026 and projects $32 billion, $73 billion, $114 billion, and $144 billion for fiscal years 2027 through 2030, respectively.
Analysts, including Evercore’s Kirk Materne, have expressed optimism about Oracle’s aggressive growth trajectory, noting that the projections surpass most estimates and indicate a robust expansion strategy. The company’s cloud and AI initiatives have thus far fueled investor confidence, reflected in the 45% year-to-date increase in ORCL shares compared to an 11% gain in the S&P 500.
Looking Ahead
Oracle executives will discuss these results and provide guidance in a conference call scheduled for 5 p.m. ET.
While earnings fell slightly short of expectations, the stock’s significant after-hours rally underscores investor enthusiasm for Oracle’s cloud expansion and AI partnerships, suggesting a bright outlook for the tech giant in the coming years.
