Oracle Stock Soars 27% on AI-Driven Revenue Growth
Oracle Stock Soars 27% on AI-Driven Revenue Growth
Oracle Corporation witnessed a dramatic 27% surge in its stock price during after-hours trading after reporting explosive growth in future artificial intelligence business orders. The company revealed that its unfulfilled performance commitments—revenue signed but not yet realized—skyrocketed to $455 billion, more than triple the $138 billion reported just three months prior.
Image source note: The image is AI-generated, and the image licensing service provider is Midjourney
"Extraordinary Quarter" for Oracle
CEO Safra Catz described the results as an "extraordinary quarter," highlighting four multi-billion-dollar contracts signed with three different customers in the latest three-month period. While Wall Street anticipated growth—especially after Oracle's $30 billion annual contract signed in July—the scale of the increase surpassed expectations.
Cloud Infrastructure Gains Traction
Though Oracle entered the cloud computing services sector later than competitors, it has gained significant traction as demand for data center infrastructure from AI startups and major tech firms surges. Earlier this year, Oracle solidified its position by signing a landmark $50 billion "Star Gate" partnership with OpenAI and SoftBank.
The stock surge added approximately $170 billion to Oracle's market capitalization, boosting founder Larry Ellison's personal wealth by roughly $70 billion. This cements Ellison's status as the world's second-richest person behind Elon Musk. Year-to-date, Oracle's stock has risen 43%.
Major Contracts With AI Leaders
During an investor call, Catz disclosed that Oracle has secured critical cloud contracts with leading AI companies, including:
- OpenAI
- xAI
- Meta
- Nvidia
- AMD
The CEO projected that Oracle's infrastructure business revenue would skyrocket from $18 billion this year to $144 billion over the next five years—a forecast nearly 60% higher than Wall Street estimates.
Capacity Concerns and Capital Expenditures
The rapid growth raises questions about how Oracle will scale its computing capacity amid industry-wide chip shortages. In response, Oracle plans to increase capital expenditures by $10 billion, reaching $35 billion by May next year. Catz emphasized that Oracle achieves higher revenues with relatively low capital expenditures by avoiding real estate investments and optimizing computing equipment efficiency. Ellison added that future demand reflects shortages in computing power required for AI model reasoning post-training. Financial results showed:
- Quarterly revenue up 12% to $14.9 billion (slightly below $15B expectations)
- Adjusted net income rose 8% year-over-year to $4.3B (exceeding forecasts) For comparison, Amazon Web Services reported over $107B revenue last fiscal year.
