Oracle Stock Surges 39% on Strong AI Cloud Outlook
Oracle shares jumped 39% in early trading on Wednesday after the company revealed a blockbuster cloud revenue forecast, easing concerns over mixed first-quarter results.
Market Value Nears Trillion-Dollar Giants
The surge lifted Oracle’s market capitalization to around $915.65 billion, putting it closer to tech heavyweights like Microsoft and Apple. The stock has more than doubled in 2024, fueled by booming demand for AI-powered cloud services.
Massive Revenue Backlog
Oracle reported that remaining performance obligations (RPO), its key measure of booked revenue, soared 359% year over year to $455 billion in the quarter ending August 31. This result far exceeded consensus expectations of $178 billion.
CEO Safra Catz said several additional multi-billion-dollar deals are expected in the coming months. Analysts at Jefferies called RPO the highlight of the quarter, strengthening confidence in Oracle’s growth momentum.
Analysts Turn Bullish
UBS strategists said Oracle’s backlog is so far ahead of Wall Street estimates that it could transform the company into “the biggest large-cap growth acceleration story in tech.” They highlighted that $317 billion in deals were added in the fiscal first quarter alone.
Oracle expects its cloud infrastructure (OCI) revenue to surpass half a trillion dollars in coming years, reflecting strong demand for its lower-cost AI cloud offerings.
Cloud and AI Growth Outlook
OCI revenue is projected to climb 77% to $18 billion this fiscal year, with future growth forecasts reaching $32 billion, $73 billion, $114 billion, and $144 billion over the next four years.
UBS analysts also said Oracle’s planned $35 billion in annual capital spending is bullish for Nvidia, AI hardware makers, and partners financing the company’s GPU data centers. GPUs are vital for training and scaling AI models.
Catz added that Oracle has already made popular AI models — including ChatGPT and xAI’s Grok — available to customers through its platform.
Mixed Quarterly Results
Despite the optimism, Oracle’s fiscal first-quarter performance was mixed. Adjusted earnings per share came in at $1.47, just below the $1.48 expected by FactSet. Revenue totaled $14.93 billion, slightly under estimates of $15.04 billion.
