Oracle Corp. (ORCL) reported fiscal third-quarter results that fell short of Wall Street expectations, sending its stock down over 6%.
Revenue for the quarter increased 6% to $14.1 billion, missing the consensus estimate of $14.4 billion. Adjusted earnings per share came in at $1.47, just below the $1.49 analysts had forecasted.
The company also delivered a weaker-than-expected sales and profit outlook for the current quarter. Oracle projected revenue growth of 8% to 10%, compared to analyst expectations of 11%, and guided earnings per share in the range of $1.61 to $1.65, falling short of the $1.77 consensus.
Despite the earnings miss, Oracle increased its quarterly dividend by 25% to $0.50 per share, underscoring management’s confidence in the company’s long-term growth strategy.
Cloud Infrastructure and AI Ambitions Drive Optimism
While Q3 results disappointed, Oracle highlighted its rapidly expanding cloud business as a key growth driver. Oracle Cloud Infrastructure (OCI) now boasts annualized revenue of $10.6 billion, with OCI consumption revenue surging 57% year-over-year. However, total cloud revenue, including applications, rose 23% to $6.2 billion, slightly below expectations.
A standout metric was Oracle’s remaining performance obligations (RPO), a measure of contracted future revenue, which soared to $130 billion—well above analyst forecasts of $105 billion. The company attributed this surge to increasing demand for AI-driven computing power and cloud services. Notably, this figure does not yet include contracts from the recently announced $100 billion Stargate project, a joint venture with OpenAI and SoftBank to build AI-focused data centers.
Larry Ellison, Oracle’s Chairman and Chief Technology Officer, emphasized the company’s position as a preferred cloud provider for AI workloads. “We have now signed cloud agreements with several world-leading technology companies including OpenAI, xAI, Meta (META), Nvidia (NVDA), and AMD (AMD),” he said. Ellison also reaffirmed Oracle’s plans to double its data center capacity in 2024 and triple it by the end of the next fiscal year, a crucial factor in meeting surging demand.
While Q3 results disappointed, Oracle highlighted its rapidly expanding cloud business as a key growth driver. Oracle Cloud Infrastructure (OCI) now boasts annualized revenue of $10.6 billion, with OCI consumption revenue surging 57% year-over-year. However, total cloud revenue, including applications, rose 23% to $6.2 billion, slightly below expectations.
A standout metric was Oracle’s remaining performance obligations (RPO), a measure of contracted future revenue, which soared to $130 billion—well above analyst forecasts of $105 billion. The company attributed this surge to increasing demand for AI-driven computing power and cloud services. Notably, this figure does not yet include contracts from the recently announced $100 billion Stargate project, a joint venture with OpenAI and SoftBank to build AI-focused data centers.
Larry Ellison, Oracle’s Chairman and Chief Technology Officer, emphasized the company’s position as a preferred cloud provider for AI workloads. “We have now signed cloud agreements with several world-leading technology companies including OpenAI, xAI, Meta (META), Nvidia (NVDA), and AMD (AMD),” he said. Ellison also reaffirmed Oracle’s plans to double its data center capacity in 2024 and triple it by the end of the next fiscal year, a crucial factor in meeting surging demand.
Long-Term Growth Outlook Remains Strong
Despite near-term setbacks, Oracle remains bullish on its growth trajectory. The company projected a 15% revenue increase in fiscal year 2026, outpacing analyst expectations of 13%, and expects an even stronger 20% growth rate in fiscal year 2027.
Analysts offered a mixed reaction to the report. Evercore ISI’s Kirk Materne acknowledged the earnings miss but noted that Oracle’s RPO growth suggests strong demand ahead. Meanwhile, Morgan Stanley’s Keith Weiss pointed out that in past years, such a surge in RPO would have triggered a stock rally, but investors are now more cautious about the sustainability of AI-driven cloud spending.
With a critical investor event—Oracle’s OCI Day—scheduled for April 2, the company will have an opportunity to provide further clarity on its cloud strategy and the highly anticipated Stargate project. While near-term stock pressure is evident, Oracle’s aggressive investment in AI infrastructure and data centers could position it as a long-term winner in the cloud computing race.
Despite near-term setbacks, Oracle remains bullish on its growth trajectory. The company projected a 15% revenue increase in fiscal year 2026, outpacing analyst expectations of 13%, and expects an even stronger 20% growth rate in fiscal year 2027.
Analysts offered a mixed reaction to the report. Evercore ISI’s Kirk Materne acknowledged the earnings miss but noted that Oracle’s RPO growth suggests strong demand ahead. Meanwhile, Morgan Stanley’s Keith Weiss pointed out that in past years, such a surge in RPO would have triggered a stock rally, but investors are now more cautious about the sustainability of AI-driven cloud spending.
With a critical investor event—Oracle’s OCI Day—scheduled for April 2, the company will have an opportunity to provide further clarity on its cloud strategy and the highly anticipated Stargate project. While near-term stock pressure is evident, Oracle’s aggressive investment in AI infrastructure and data centers could position it as a long-term winner in the cloud computing race.
Considering a $1,000 investment in these companies?
Our team at Stock Investor carefully curated a list of top stocks with the potential for significant returns, suitable for beginners and seasoned investors alike who are eager to learn a trade and unearth the best stocks to buy. Though not featured in this article, these selected stocks could be game-changers in the future.For those seeking dynamic trading experiences, consider joining our Swing Trade Alerts, Option Income Alert, or our Trading Room. Take advantage of our special offer today, starting at just $1 in the first month.
Unlock the secrets of Smart Money
Explore how billionaires and institutions are influencing the market. Follow their every move with DarkOption Flow and stay updated on essential market insights. Begin your journey to informed investing today!
Education
And if you're a fan of Invest opedia, you'll appreciate what we offer at SharperTrades even more. Explore our comprehensive option trading course and technical trading course, where you can learn trading, analyze stocks, delve into chart patterns for stocks, and gain invaluable insights for making the best company investments.
Unlock Your Stock Market Edge with SharperTrades. Dive into powerful trading tools, learn a trade, and receive expert guidance. Stay up-to-date with regular market updates. Learn trading, basics of investing, and how to pick the best stocks to buy. Whether you're a beginner or seasoned investor and trader, we've got you covered. Get started for free, today!