Oracle benefits from AI demand, quarterly earnings surpass expectations, ORCL soars over 8%

Oracle’s latest financial report shows that driven by the continued strong demand for artificial intelligence (AI) computing, its cloud infrastructure business revenue has achieved steady growth. The company not only exceeded market expectations in both quarterly revenue and profit but also provided an annual revenue outlook that surpasses Wall Street estimates. Oracle (ORCL) stock surged over 8% in after-hours trading, as concerns about capital expenditure and financing related to large AI projects have increased on Wall Street. The stock has fallen more than 50% from its high in September last year.

Oracle Cloud Infrastructure Revenue Surpasses Expectations, Growth Driven by AI Demand

Oracle’s latest earnings report indicates that its cloud infrastructure revenue increased 84% year-over-year to $4.9 billion, beating the expected $3.9 billion, mainly due to large contracts with clients like OpenAI and Meta. Total quarterly revenue reached $17.2 billion, with adjusted earnings per share of $1.79, both surpassing market estimates. This data shows that, under the strong demand for AI model training and inference, providing data centers equipped with high-end chips has become the company’s most critical revenue growth engine.

Capital Expenditure Expansion and Contract Value Outlook Rise

Oracle’s capital expenditure (CapEx) for the quarter reached $18.6 billion, exceeding market expectations. However, the company maintained its full-year CapEx outlook of $50 billion and emphasized that it will not exceed this amount, easing concerns about over-investment. Meanwhile, the remaining performance obligations (RPO), which measure future order commitments, rose to $553 billion, indicating that most large AI clients have committed to prepay hardware resource costs, providing substantial assurance for Oracle’s future stable cash flow.

Dual Effects of Corporate Restructuring and AI-Enhanced Operational Efficiency

Along with hardware expansion, Oracle has also undertaken organizational restructuring. The company stated that, benefiting from AI-assisted code generation technology, software development efficiency has significantly improved, leading to workforce reductions. Senior executives also pointed out that although AI may impact SaaS providers with single-function offerings, companies with comprehensive cloud application capabilities will still maintain a competitive advantage in this wave of technological advancement.

(Oracle plans to cut thousands of jobs and halt expansion plans with OpenAI)

ORCL Surges Over 8% After Hours

Oracle’s stock (ORCL) closed at $149.40 in New York, and after the earnings report, it briefly reached a high of $164.51 in after-hours trading. Due to increasing concerns on Wall Street about capital expenditure and financing related to large AI projects, the stock has fallen more than 50% from its high in September last year.

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