Oracle Stock Skyrockets 32% – Here’s What’s Fueling the Move

• Oracle (ORCL) shares surged 32% to $318.48 in premarket trading despite missing earnings per share of $1.47 and revenue of $14.93 billion, fueled by a 359% rise in remaining performance obligations to $455 billion and robust cloud infrastructure growth.
• The company’s cloud segment generated $3.3 billion in revenue, up 55% year-over-year, bolstered by partnerships including OpenAI’s 4.5 gigawatt data center deal and integration of Google (GOOGL) Gemini AI models, with four multibillion-dollar contracts signed.
• Oracle projects $18 billion in cloud infrastructure revenue for fiscal 2026, scaling to $144 billion over four years, while shares are up 45% year-to-date, potentially marking the stock’s strongest single-day gain since 1999 if it rises 22% or more.

Oracle (ORCL) is experiencing a significant surge in its stock price, climbing 32% to $318.48 in premarket trading following the release of its latest quarterly results. Despite adjusted earnings per share of $1.47 falling short of the $1.48 consensus estimate and revenue of $14.93 billion missing the $15.04 billion expectation, the company’s robust outlook for cloud expansion has overshadowed these misses. Revenue for the quarter ended August 31 rose 12% from $13.3 billion a year earlier, while net income remained essentially flat at $2.93 billion, or $1.01 per share, compared to $2.93 billion, or $1.03 per share, in the prior-year period.

A key highlight driving investor enthusiasm is the dramatic increase in Oracle’s remaining performance obligations, which measure future contracted revenue yet to be recognized. This metric reached $455 billion, marking a 359% year-over-year rise, signaling strong demand for Oracle’s services. The company’s cloud infrastructure segment, a critical component of its enterprise software portfolio, generated $3.3 billion in revenue during the quarter, up 55% from the previous year, following a 52% growth rate in the fiscal fourth quarter. This performance underscores Oracle’s deepening role in the artificial intelligence ecosystem, where its access to Nvidia Corporation (NVDA) graphics processing units enables handling of large-scale AI workloads.

Oracle’s strategic partnerships have further bolstered its position. In the quarter, OpenAI announced an agreement with Oracle to develop 4.5 gigawatts of U.S. data center capacity, enhancing Oracle’s infrastructure for AI applications. Additionally, Oracle integrated Google LLC (GOOGL) Gemini AI models into its cloud platform, expanding options for customers seeking advanced AI capabilities. CEO Safra Catz highlighted the signing of four multibillion-dollar contracts with three customers, reflecting accelerated enterprise adoption. In August, Oracle incorporated OpenAI’s GPT-5 AI model into its cloud applications, and co-founder Larry Ellison announced plans for an Oracle AI Database service launching in October. This service will enable running AI models from OpenAI and others directly on client data within Oracle databases, fostering tighter integration and data privacy for enterprise users.

Ellison emphasized the transformative impact of AI on Oracle’s business interactions, noting direct engagements with CEOs and even heads of state due to the technology’s strategic importance. This shift aligns with Oracle’s evolution from a traditional database provider to a cloud powerhouse, competing effectively against established players like Microsoft Corporation (MSFT) and Amazon.com Inc. (AMZN). For context, Microsoft’s Azure cloud infrastructure generated $75 billion in revenue over the past 12 months, while Amazon’s cloud revenue approached $112 billion in the same period. Oracle’s cloud infrastructure revenue for fiscal 2025 totaled roughly $10 billion, with management projecting $18 billion for fiscal 2026, implying 77% growth. Looking further ahead, the company anticipates this segment reaching $32 billion, $73 billion, $114 billion, and $144 billion annually over the subsequent four years.

Guidance for the fiscal second quarter points to adjusted earnings per share of $1.61 to $1.65 and revenue growth of 14% to 16%, against analyst expectations of $1.62 per share and $16.21 billion in revenue, which implies 15% growth. To support this expansion, Oracle plans capital expenditures of around $35 billion for the new fiscal year, a 65% increase. Catz described the company’s approach as asset-pretty-light, focusing on leasing rather than owning data centers, which differentiates it from competitors like Microsoft that invest heavily in physical infrastructure.

The stock’s performance reflects broader market dynamics, with Oracle shares up 45% year-to-date as of Tuesday’s close, outpacing the S&P 500 index’s (SPX) 11% gain and reaching a record high last month. A 22% or greater advance on Wednesday would mark the stock’s strongest single-day rally since 1999 and its third-best ever, potentially pushing Oracle’s market cap beyond $700 billion. Evercore analyst Kirk Materne, who maintains the equivalent of a ‘Buy’ rating, had forecasted $108 billion in cloud infrastructure revenue for fiscal 2029, indicating that Oracle’s ambitious projections could exceed even optimistic estimates and solidify its competitive edge in the cloud AI landscape.

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