The results help ease investor concerns that Oracle’s expensive multibillion-dollar push into AI computing won’t pay off enough.
Remaining operating obligations (RPO), a key indicator of future contracted revenue, rose 325% from last year to $553 billion, ahead of the $540.37 billion estimate from Four View Alpha analysts.
Most of the RPO increase in the quarter was related to large-scale AI contracts where Oracle “does not expect 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 analysts’ estimates of $86.6 billion, according to data compiled by LSEG. “Oracle’s quarter is a beating and stress-testing result for the AI business,” said eMarketer analyst Jacob Bourne. “As the most undervalued major player in AI infrastructure, Oracle is the canary in the coal mine and this report suggests there is health beyond the hype in AI spending.”
Long known for its database software and enterprise applications for finance, Oracle has repositioned itself as a cloud computing infrastructure contender in recent years after hiring key executives from rivals.
The company’s strategy to build data centers is helping it capture a growing share of the AI market. Oracle is spending heavily to expand its cloud infrastructure to support productive AI workloads, competing for customers against hyperscalers such as Amazon’s AWS and Microsoft Azure. Oracle also said it is restructuring its product development teams, as new AI code generation technologies enable people to develop software in less time.
The company reported total revenue of $17.19 billion for the quarter, compared to the average analyst estimate of $16.91 billion, according to data compiled by LSEG.
For its current fiscal fourth quarter, Oracle is forecasting adjusted earnings of between $1.96 and $2.00 in US dollars, above analysts’ estimates of $1.94 per share.
The company expects fiscal fourth-quarter revenue growth of 19% to 21% in the U.S., in line with analyst estimates of 20.2% growth to $19.12 billion. Similarly, Oracle forecast cloud revenue growth to be 46% to 50% in the US, according to LSEG data, compared to an estimate of 48% growth to $9.98 billion.
