Oracle Stock Jumps 8% on Strong AI Revenue Projections Through 2027

Database giant Oracle saw its stock price surge 8% after predicting that artificial intelligence demand will drive revenue growth well beyond Wall Street expectations through 2027. The company reported stronger-than-expected quarterly results and raised its fiscal 2027 revenue forecast to $90 billion.

Database software giant Oracle Corporation experienced a significant stock price boost Tuesday evening, with shares climbing 8% in after-hours trading following the company’s optimistic projections about artificial intelligence revenue lasting through 2027.

The technology firm announced that surging demand for AI data center services will drive revenues well past what Wall Street analysts had predicted, helping to ease investor worries about whether Oracle’s expensive multi-billion dollar investment in AI infrastructure would deliver returns fast enough.

A crucial metric called remaining performance obligations, which indicates future contracted revenue, skyrocketed 325% compared to the previous year, reaching $553 billion and surpassing the $540.37 billion projection from four Visible Alpha analysts.

According to a company statement, the majority of this quarter’s RPO growth stems from major AI contracts where Oracle “does not expect to have to raise any incremental funds.”

Oracle also boosted its revenue projection for fiscal 2027 to $90 billion, exceeding analyst predictions of $86.6 billion based on LSEG data.

eMarketer analyst Jacob Bourne commented on the results, saying “Oracle’s quarter is a beat and a stress test result for the AI trade.” He added, “As the most debt-exposed major player in AI infrastructure, Oracle is the canary in the coal mine and this report suggests there’s underlying health in AI spending beyond the hype.”

The company, traditionally recognized for database software and business applications for financial services, has been transforming itself into a cloud computing infrastructure rival in recent years by hiring top executives from competing firms.

Oracle’s aggressive data center expansion strategy has allowed it to secure a portion of the rapidly growing artificial intelligence market. The firm has been investing heavily to expand its cloud infrastructure capabilities for generative AI applications, challenging major competitors like Amazon Web Services and Microsoft Azure.

The company also revealed it has been reorganizing its product development divisions, as emerging AI code generation tools allow it to create more software products faster with smaller teams.

Oracle posted total quarterly revenue of $17.19 billion, beating analysts’ average projection of $16.91 billion according to LSEG data.

Looking ahead to its current fiscal fourth quarter, Oracle forecasts adjusted earnings between $1.96 and $2.00 per share, above analysts’ expectations of $1.94 per share.

The company anticipates fourth-quarter revenue growth of 19% to 21%, matching analysts’ estimates of 20.2% growth to $19.12 billion. Oracle also projected cloud revenue growth of 46% to 50%, aligning with estimates of 48% growth to $9.98 billion, according to LSEG information.