Oracle stock surges on strong AI revenue forecast
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Oracle signage on the floor at the New York Stock Exchange on Monday. Photo: Michael Nagle/Bloomberg via Getty Images
Oracle shares jumped Tuesday after the cloud computing giant said it expects to "comfortably meet and likely exceed" its previous revenue growth outlook for the next fiscal year "and beyond."
Why it matters: Oracle had been on the hot seat as investors questioned whether it could handle a deluge of business from AI tech giants.
Driving the news: Oracle on Tuesday raised its revenue forecast for the next fiscal year to $90 billion.
- Analysts had expected $86.6 billion, CNBC reported, citing LSEG.
By the numbers: In Oracle's most recent quarter, revenue rose 22% to $17.2 billion, exceeding S&P Capital IQ expectations of $16.9 billion.
- That included a 44% jump in cloud revenues to $8.9 billion.
- Net income of $3.7 billion topped expectations of $3.6 billion.
What they're saying: The revenue showing was "meaningfully above" expectations, says Melissa Otto, head of research at S&P Global Visible Alpha, but now the "investor focus is likely to pivot to profitability."
Zoom in: The company's order backlog — which it calls remaining performance obligations (RPO) — totaled $553 billion at the end of the quarter, up 325% from a year earlier.
- Most came from AI contracts "where Oracle does not expect to have to raise any incremental funds" to deliver computing services, it said.
The impact: Oracle shares — which had lost more than 54% of their value over the last six months — surged 8.7% in after-hours trading.
- The earnings report also comes amid a slumping stock market as investors remain dazed by rising energy prices stemming from the Iran war.
What we're watching: Oracle said that its own AI coding capabilities have advanced to a point where it's "enabling us to build more software in less time with fewer people."
- "AI models for generating computer code have become so efficient that we have been restructuring our product development teams into smaller, more agile and productive groups," the company said.
Editor's note: This article was updated with additional analyst comment.
