TLDRs
- Oracle stock jumps nearly 10% after reporting strong cloud and AI revenue growth.
- Q3 revenue rises 22%, with OCI up 84% and cloud revenue up 44%.
- RPO backlog soars 325%, providing a massive runway for future growth.
- AI deals structured to reduce upfront costs help ease funding pressures.
Oracle (NASDAQ:ORCL) shares surged nearly 10% on Wednesday, closing at $163.83 after peaking at $171.60 in intraday trading. Investors cheered the company’s strong Q3 earnings report, which highlighted robust cloud growth and promising AI developments. The stock’s jump reflects renewed confidence in Oracle’s ability to compete in the cloud infrastructure and enterprise software markets.
For the quarter ended February 28, Oracle reported revenue of $17.19 billion, up 22% year-over-year. Cloud revenue contributed $8.9 billion, a 44% increase, while Oracle Cloud Infrastructure (OCI) surged 84%, underscoring the company’s expanding footprint in cloud services. Non-GAAP earnings per share came in at $1.79, marking a milestone: the first time in over 15 years that Oracle achieved at least 20% growth in both organic revenue and adjusted EPS in U.S. dollars.
Record RPO Backlog Fuels Investor Optimism
One standout metric that impressed analysts was Oracle’s remaining performance obligations (RPO), which climbed 325% year-over-year to $553 billion. This figure represents revenue already contracted but not yet recognized, giving Oracle a significant runway of future earnings. Market observers highlighted that this backlog positions the company to maintain strong growth momentum even amid broader tech sector uncertainty.
“Oracle’s RPO growth shows that the AI trade isn’t just hype,” noted Jacob Bourne of eMarketer, calling the results a “stress test for enterprise AI adoption.”
Investors view this backlog as a buffer that can support sustained revenue and profit growth over multiple quarters.
AI Deals Structured to Ease Funding Pressure
Another factor driving investor confidence was Oracle’s strategic approach to funding its AI expansion. Earlier concerns suggested Oracle might need as much as $50 billion through debt and equity financing in 2026. The company has already secured $30 billion while maintaining its capital spending guidance at $50 billion for fiscal 2026.
Many of Oracle’s new AI contracts require customers to either pay upfront or supply their own graphics chips, reducing the company’s initial capital outlay. This approach allows Oracle to rapidly scale AI operations while maintaining healthy margins. Analysts noted that these deal structures could serve as a template for other enterprise tech firms looking to expand AI offerings without overextending financially.
Cloud and Database Dominance Remain Key
Oracle continues to challenge industry leaders like AWS and Microsoft Azure. OCI’s 84% growth, paired with a 531% jump in multicloud database revenue, demonstrates Oracle’s ability to capture high-value enterprise clients. The company is actively building new data centers for clients such as OpenAI and Meta, signaling confidence in its cloud infrastructure strategy.
Co-founder Larry Ellison addressed concerns that AI tools might reduce SaaS demand, dismissing the “SaaS-apocalypse” scenario. Instead, Oracle is leveraging AI to build software more efficiently with leaner teams, preserving traditional software revenue streams while innovating in new areas.
Looking ahead, Oracle projects adjusted EPS of $1.96–$2.00 and expects revenue growth of 19%–21% this quarter. Cloud revenue guidance is 46%–50%, while margins on AI chip rentals are estimated at 30%–40%, with database services remaining even more profitable. Analysts caution that sustaining growth and achieving profitability in AI remains the next key challenge for investors.
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