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Oracle (ORCL) shares experienced a significant surge in premarket U.S. trading on Tuesday following the announcement of stronger-than-expected quarterly earnings, driven by increased demand for its AI offerings.
Profit per share excluding items, witnessed a notable 16% jump in its fiscal third quarter, reaching $1.41, surpassing Bloomberg consensus estimates of $1.38.
Furthermore, remaining performance obligations, serving as a gauge of booked revenue, saw a remarkable 29% increase, surpassing $80 billion. Analysts hailed this performance as “stellar” and “very strong” in notes to clients.
In a statement, Chief Executive Safra Catz expressed optimism about the firm’s future, expecting continued large contracts to reserve cloud infrastructure capacity due to the substantial demand for their Gen2 AI infrastructure. Despite rapid expansion with new and existing cloud data centers, demand continues to outstrip supply.
Analysts at BMO Capital Markets noted that cloud capacity appears to be aligning with the rollout of new data centers, projecting solid revenue growth throughout Oracle’s upcoming 2025 financial year.
Additionally, analysts at JPMorgan endorsed this bullish view, suggesting that the backlog must convert to revenue over time. Oracle anticipates revenue growth in the range of 4% to 6% in its current quarter.
Moreover, Oracle disclosed plans for a joint announcement with Nvidia (NVDA) this week, emphasizing their collaboration in AI technology. Nvidia’s AI-optimized chips, utilized by Oracle’s cloud service customers, underscore the strategic partnership between the two companies.
The positive momentum in Oracle shares spilled over into other tech heavyweights post-market close on Monday, indicating the profound influence of AI enthusiasm on stock gains in recent months. Nvidia witnessed a 2.0% increase, while Microsoft Corporation (MSFT) and Alphabet Inc (GOOGL) both added 0.6% by 04:06 ET.
