So, you know that whole AI thing everyone's been talking about? For Oracle Corp. (ORCL), it's not just talk—it's a rocket booster strapped to the financials. The company's stock is jumping more than 10% Wednesday morning after it reported quarterly results that didn't just beat expectations, they blew past them with a side of incredibly bold guidance for the future.
Oracle's AI Engine Is Firing on All Cylinders, Sending Shares Soaring
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Oracle's quarterly results smashed expectations, fueled by an 84% surge in cloud infrastructure revenue. The company's aggressive AI bet is paying off, with management projecting massive growth for the year ahead.
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The Numbers That Made Everyone Look Twice
For its fiscal third quarter, Oracle posted revenue of $17.19 billion. That was comfortably ahead of the $16.91 billion analysts were looking for. On the bottom line, adjusted earnings per share came in at $1.79, a 21% jump from a year ago and nicely above the $1.71 consensus estimate.
But the real story, the one that has investors hitting the buy button, is in the cloud. Specifically, the cloud infrastructure segment, which saw revenue skyrocket 84% year-over-year to $4.9 billion. It wasn't a one-trick pony, either. Cloud Applications revenue grew 13% to $4 billion, and the company's Fusion Cloud and NetSuite ERP offerings posted solid growth of 17% and 14%, respectively.
The Guidance That Says "We're Just Getting Started"
If the quarterly beat was impressive, the look ahead is what's truly turning heads. For the current fourth quarter, Oracle expects revenue growth of 18% to 20%. More importantly, it sees total cloud revenue soaring 44% to 48%. Adjusted EPS guidance of $1.96 to $2.00 also edges past the $1.95 consensus.
Then there's the big picture. The company reaffirmed its full fiscal 2026 revenue guidance of $67 billion. But for fiscal 2027? Oracle is projecting a staggering $90 billion in revenue. That's a number that lands well above the $86.63 billion analysts had penciled in. The message from management is clear: the AI-driven demand we're seeing isn't a flash in the pan; it's a multi-year tailwind.
The Profitable (But Expensive) AI Bet
On the earnings call, Co-CEO Clay Magouyrk got into the nitty-gritty of the AI business, directly addressing questions about margins. He explained that the company's AI infrastructure—the part powered by those expensive Nvidia chips and their ilk—is already delivering gross margins in the 30% to 40% range. The adjacent cloud services that come with it, like compute, storage, and networking, are even more lucrative, carrying margins of 60% to 80%.
So, if it's so profitable, why aren't the overall margins even higher? Magouyrk pointed to the cost of aggressive expansion. Oracle is in a race to build data centers to meet this explosive demand, and it's constructing multiple facilities at once. Some of those construction costs hit the books before the data centers are even operational and generating revenue. It's a temporary drag for what the company believes is a massive long-term opportunity.
Oracle ended the quarter with a war chest of roughly $38.46 billion in cash, giving it plenty of fuel to keep building. In premarket trading Wednesday, shares were up 10.11% at $164.51.
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