TMTPOST -- Oracel Corporation stocks rallied 13.3% to notch a record high close of $199.86 on Thursday. Stocks logged their best day in three-and-a-half years after the software behemoth reported earnings beat and signaled stronger cloud growth outlook driven by artficial intelligence (AI) demand.
Credit：IDC
Both of Oracle』s top and bottom lines for its fourth fiscal quarter ended May 31 beat Wall Street expectation. Revenue jumped 11% year-over-year (YoY) to $15.9 billion, compared with analysts estimated $15.6 billion polled by FactSet. Adjusted earnings per share (EPS) rose more than 4% YoY to $1.70, surpassing analysts』 forecast of $1.64 per share.
Oracle Cloud Infrastructure (OCI) generated $3.0 billion for the May-ended quarter with a YoY rise of 52%. Sales of the closely-watched business accelerated from an increase of 49% for the previous quarter. OCI is a key part of Oracle』s push to be an AI leader as it provides cloud-computing services to businesses, competing against cloud giants like Amazon.com, Inc. and Microsoft Corp.
Calling OCI revenue growth rates and demand 「skyrocketing」, Oracle Chairman and Chief Technology Officer (CTO) Larry Ellison said the overall OCI consumption revenue grew 62% for the fiscal fourth quarter, and the company expected the OCI consumption revenue to grow even faster in the fiscal year 2026.
Remaining performance obligations (RPO), a measurement of money that』s expected to be recognized as revenue in the future, jumped 41% YoY to $138 billion. Oracle raised its guidance for the current fiscal year and management attributed it to AI demand.
Capital expenditures (CapEx) for the 2025 fiscal year surpassed $21 billion, compared with less than $7 billion for the preceding fiscal year. The tally for the new fiscal year should be above $25 billion, Orcale CEO Safra Catz said.
Catz said on an earnings conference that revenue for the fiscal year 2026, which ends in May 2026, is expected to hit 「at least $67 billion」, up from the prior guidance of $66 billion, whereas LSEG』s consensus projection stood at $65.18 billion. "What is clear is that more customers will use the Oracle database to leverage AI," Catz told analysts.
Catz in a statement disclosed Oracle projected its total cloud growth rate--applications plus infrastructure—will increase from 24% in fiscal year 25 to over 40% to the fiscal year 2026. 「Cloud Infrastructure growth rate is expected to increase from 50% in FY25 to over 70% in FY26. And RPO is likely to grow more than 100% in FY26. Oracle is well on its way to being not only the world's largest cloud application company—but also one of the world's largest cloud infrastructure companies,」 said Catz.
Catz said RPO will likely more than double in the fiscal year 2026, and three year later, revenue for the fiscal year 2029 should be above the $104 billion target Oracle set in September.
It is notable that gains from OpenAI』s Stargate AI project are not included in Oracle』s forecast. 「If Stargate turns out to be, everything is advertised, then we』ve understated our RPO growth,」 Ellison said.
Wall Street analysts seemed impressed by Oracle』s guidance for the new fiscal year, and believed its spending forecast and business commitments suggest more momentum ahead.
Evercore ISI analyst Kirk Materne noted Oracle now expects more than 40% growth in cloud revenue for the 2026 fiscal year, versus the 24% growth rate seen in the past fiscal year. The company looks "extremely well positioned to continue to benefit from the rapid increase in demand for AI and [generative AI] services," he commented.
Bernstein analyst Mark Moerdler felt that Oracle "sounded more bullish than ever for FY27 and beyond." The company saw RPO rise 41% from a year before. Meanwhile, its capital-expenditure forecast for more than $25 billion in spending this fiscal year could be a positive signal around revenue potential. Moerdler wrote in a note that from these trends one can see where Oracle』s confidence is from. He also pointed out the company has benefited a lot from sovereign AI, which is when countries look to build out their AI infrastructure.
