Shares Pop After Results and Higher Long-Term Target
Oracle rallied in extended trading Tuesday after the company posted a quarterly beat and lifted its fiscal 2027 revenue outlook. The software and cloud vendor reported $17.19 billion in revenue versus $16.91 billion expected and adjusted EPS of $1.79 versus $1.70 expected, according to LSEG. Oracle said overall revenue rose 22% year over year in the quarter ended Feb. 28, while net income increased to $3.72 billion, or $1.27 per share.
Management also raised its fiscal 2027 revenue forecast by $1 billion to $90 billion, above the $86.6 billion analysts had been modeling.
Cloud Growth Accelerates as AI Infrastructure Demand Builds
Oracle reported $8.9 billion in total cloud revenue, up 44%, slightly above StreetAccount’s $8.85 billion consensus. Cloud infrastructure revenue reached $4.9 billion, up 84%, accelerating from 68% growth in the prior quarter. Oracle pointed to cloud work tied to customers including Air France-KLM, Lockheed Martin, SoftBank Corp. and Microsoft’s Activision Blizzard.
The company said remaining performance obligations climbed to $553 billion, more than quadrupling from a year earlier, though slightly below the StreetAccount estimate of $556 billion.
Guidance, Capex Plans, and the Funding Model for GPUs
For the fiscal fourth quarter, Oracle projected adjusted EPS of $1.92 to $1.96 and revenue growth of 19% to 20%. Oracle also said it plans to raise $45 billion to $50 billion in the fiscal year to expand cloud capacity and expects more than 10 gigawatts of computing power to come online over the next three years.
Oracle argued that much of the recent backlog tied to large AI contracts does not require incremental funding because hardware is often supported by customer prepayments used to buy GPUs, or customers provide GPUs directly.
Margins, Cash Flow Pressure, and Workforce Changes
Oracle has been investing heavily in AI infrastructure, including renting Nvidia graphics chips, a business model that typically carries thinner margins than traditional software licensing. The company reported $13.18 billion in negative free cash flow over the past 12 months. Shares had been under pressure, down 23% in 2026 at Tuesday’s close.
On a call with analysts, Oracle co-founder and executive chairman Larry Ellison framed the strategy as building agent-driven software stacks for industries such as healthcare and financial services, arguing Oracle can keep expanding SaaS even as some rivals face slower growth. Oracle also said it is using AI code-generation tools to build software faster with smaller product teams, describing ongoing restructuring tied to productivity gains.
