Oracle delivered a strong signal that the global boom in artificial intelligence infrastructure is translating into real business momentum, after reporting a massive surge in future contracted revenue and forecasting sales growth that could exceed Wall Street expectations through 2027.
The enterprise software giant said demand for AI computing capacity is accelerating rapidly as technology companies race to build and deploy generative AI systems. The surge in demand is helping to justify Oracle’s aggressive and debt-funded expansion into large-scale data centers designed specifically for AI workloads.
Investors reacted positively to the outlook, sending Oracle’s shares up about 8.3% in extended trading following the earnings announcement.
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At the center of the optimism is the company’s remaining performance obligations (RPO), a key metric that measures the value of contracted revenue yet to be recognized. Oracle said RPO jumped 325% year-on-year to $553 billion in its third quarter. That figure surpassed analysts’ estimates of about $540.37 billion compiled by Visible Alpha and rose sharply from $523 billion reported in the previous quarter.
The scale of the backlog suggests Oracle has already secured long-term commitments from customers that will drive revenue growth for years. Executives said most of the surge in RPO is tied to large AI computing agreements involving companies building and operating advanced AI systems.
These contracts typically involve long-term commitments to rent large volumes of computing capacity from Oracle’s expanding network of data centers. Among the companies relying on Oracle’s infrastructure are leading AI developers, including OpenAI and major technology platforms such as Meta, both of which require enormous computing power to train and operate increasingly sophisticated AI models.
Oracle has been pouring billions of dollars into building and expanding data centers capable of hosting high-performance AI workloads. The strategy marks a significant shift for a company historically known for its enterprise database software.
Over the past several years, Oracle has repositioned itself as a cloud infrastructure provider, competing directly with hyperscale cloud platforms operated by Amazon through its AWS division and Microsoft through Azure. While those rivals dominate the cloud computing market, Oracle is attempting to carve out a niche by offering infrastructure optimized for large-scale AI training and inference workloads.
Industry analysts say the company’s growing backlog suggests the strategy is beginning to gain traction.
“Oracle’s quarter is a beat and a stress test result for the AI trade,” said Jacob Bourne, an analyst at eMarketer. “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.”
Oracle’s heavy borrowing to finance new data centers has been a point of concern for investors. Building AI infrastructure requires enormous capital expenditures for facilities, power systems, and advanced chips.
However, the company said the large AI contracts already secured mean it does not expect to raise additional funds to support its current infrastructure expansion. That assurance helped calm fears that Oracle’s investment cycle might strain its balance sheet before generating meaningful returns.
The company also lifted its long-term financial outlook.
Oracle now expects revenue to reach $90 billion by fiscal 2027, well above analysts’ forecasts of $86.6 billion compiled by LSEG.
Executives believe demand for AI infrastructure will continue to expand as enterprises adopt generative AI technologies across industries ranging from finance and healthcare to manufacturing and retail.
On a call with investors, Oracle executive Clay Magouyrk said profitability in the company’s cloud business should improve significantly as AI infrastructure scales. Magouyrk explained that renting out high-performance chips supplied by partners such as Nvidia is expected to generate margins of around 30% to 40%.
But he noted that a significant portion of customer spending goes beyond raw computing capacity.
Between 10% and 20% of cloud customers’ spending typically flows into additional Oracle services, including the company’s core database products. Those offerings generate much higher profit margins, often ranging between 60% and 80%.
“When you combine all of these pieces together, the overall margin profile of Oracle Cloud Infrastructure continues to strengthen and grows rapidly,” Magouyrk said.
Oracle’s broader strategy also pinpoints the growing influence of artificial intelligence in software development itself.
On the earnings call, Oracle co-founder and executive chairman Larry Ellison addressed rising speculation that AI coding tools could reduce demand for traditional software vendors by allowing companies to generate their own applications.
Ellison argued that the opposite could happen for Oracle.
He said the company is embracing AI coding tools internally to enable smaller engineering teams to build sophisticated new applications more quickly.
“Thank God we have these coding tools now that allow us to build a comprehensive set of software — agent-based software to automate a complete ecosystem like healthcare, or financial services,” Ellison said.
“That’s why we think the ‘SaaS apocalypse’ applies to others but not to Oracle.”
The remarks highlight a broader shift taking place across the technology industry, where AI is not only creating demand for massive computing infrastructure but also reshaping how software itself is built and deployed.
Oracle’s financial results for the quarter also exceeded expectations.
The company reported revenue of $17.19 billion for the third quarter ended February 28, topping analysts’ average estimate of $16.91 billion.
Looking ahead to the current fiscal fourth quarter, Oracle forecast adjusted earnings between $1.96 and $2.00 per share, slightly above analysts’ expectations of $1.94. The company expects overall revenue growth of 19% to 21% in the fourth quarter, broadly consistent with analysts’ forecasts of about 20.2% growth to approximately $19.12 billion. Cloud revenue is expected to grow even faster. Oracle projected cloud sales growth of between 46% and 50%, close to analyst expectations of about 48% growth to nearly $9.98 billion.
The strong projections reinforce the idea that the infrastructure supporting generative AI is becoming one of the most powerful growth engines in the global technology industry.
As corporations and governments race to develop AI systems capable of automating tasks, generating content, and analyzing vast datasets, demand for the computing resources needed to run those models is exploding.
The latest results point to Oracle’s high-stakes gamble — investing billions to become a major provider of AI computing infrastructure — is beginning to deliver tangible financial returns. The company is expected to emerge as one of the most important infrastructure providers in the AI economy if the surge in spending continues.