TLDR
- Oracle stock surged 29% in premarket trading after CEO projected AI cloud revenue will reach $144 billion by 2030
- Contract backlog jumped 359% to $455 billion in Q1 driven by deals with OpenAI, Meta, and xAI
- Q1 earnings missed with $1.47 EPS vs $1.48 expected and $14.9B revenue vs $15.0B expected
- Capital spending will increase to $35 billion in fiscal 2026 to support AI infrastructure demand
- Oracle shares have gained over 70% in the past year on cloud transformation
Oracle Corporation stock rocketed higher Wednesday morning after CEO Safra Catz delivered an explosive forecast for the company’s artificial intelligence cloud business. The database giant projects AI-fueled cloud infrastructure revenue will hit $144 billion by fiscal 2030.
This stunning projection marks a massive leap from Oracle’s current expectations of less than $20 billion for the cloud business this fiscal year. The company expects Oracle Cloud Infrastructure revenue to grow 77% to $18 billion in fiscal 2025, then accelerate to $32 billion, $73 billion, $114 billion, and finally $144 billion over the subsequent four years.
The premarket surge came despite Oracle reporting mixed first quarter results. Adjusted earnings per share of $1.47 missed Wall Street estimates of $1.48, while revenue of $14.9 billion fell short of the $15.0 billion consensus.
Record Contract Backlog Drives Optimism
Oracle’s remaining performance obligations tell a different story than the quarterly miss. This key metric, representing total contracted revenue the company will deliver based on customer agreements, exploded 359% to $455 billion in Q1.
The surge was driven by four multibillion-dollar contracts with three different customers during the quarter. Catz revealed Oracle has signed deals with AI leaders including OpenAI, xAI, Meta, Nvidia, and AMD.
“Someone called us: ‘We’ll take all the capacity you have that’s currently not being used anywhere in the world. We don’t care,'” Chairman Larry Ellison said on the earnings call. “I’ve never gotten a call like that.”
Catz expects Oracle to sign several additional multibillion-dollar customers in coming months, with the backlog likely exceeding half a trillion dollars.
Massive Infrastructure Investment Required
Oracle is making unprecedented investments to support this growth trajectory. Capital expenditures will jump to roughly $35 billion in fiscal 2026, up from the previous outlook of $25 billion and last year’s $21 billion spend.
The company has been aggressively securing Nvidia’s coveted GPUs and renting out computing power through its cloud infrastructure business. This strategy positions Oracle to compete directly with Amazon Web Services and Google Cloud in the rapidly growing AI infrastructure market.
To fund this expansion, Oracle has laid off workers and reportedly discussed eliminating cash raises and bonuses for employees this year.
Oracle shares closed Tuesday at $241.51 before jumping above $322 in premarket trading Wednesday. The stock has gained more than 70% over the past year as investors bet on the company’s transformation from traditional database software to AI-powered cloud services.
