Oracle shares climbed about 10% before the market opened on Wednesday after the software company provided a stronger-than-expected revenue outlook and disclosed a sharp rise in contracted future revenue. The market reaction reflected reduced near-term concern about getting faster returns from Oracle’s substantial spending on artificial intelligence infrastructure.
The company has invested billions to build data centers used by partners such as OpenAI and Meta, while also reducing headcount and adopting smaller, AI-assisted engineering teams and tools to continue developing software for its established enterprise customers and other businesses.
Revenue guidance and forward-looking metrics
Oracle raised its revenue forecast for fiscal 2027 to $90 billion, topping analysts’ consensus of $86.6 billion. A key metric for contracted revenue, remaining performance obligations (RPO), increased 325% year-over-year to $553 billion in the third quarter, up from $523 billion in the prior quarter and above market estimates.
For the current fiscal fourth quarter, Oracle projected adjusted earnings per share between $1.96 and $2.00, ahead of analysts’ expectations of $1.94.
Investor perspective on AI exposure
Analysts say Oracle is a direct way for investors to access the ongoing buildout of AI infrastructure, but with corresponding risk. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Oracle looks "like one of the more direct ways for investors to tap into the ongoing buildout of AI infrastructure. It’s a higher-risk, higher-reward stock, and effectively a leveraged play on the AI theme, which means it’s the first in line to take some punishment should the AI story lose steam."
SAAS RISK DEBATE CONTINUES
On the conference call, co-founder and executive chairman Larry Ellison pushed back on rising investor concerns that AI coding tools could reduce demand for business software. He said those concerns should not apply to Oracle, noting the company is incorporating those AI tools by deploying small engineering teams to build new software-as-a-service products.
However, some analysts remain cautious about whether AI-driven coding advances could ultimately affect seat counts and pricing. Melius Research noted, "While these (Ellison) are very credible comments, it remains to be seen if Oracle sees an impact on seats and pricing shifts that could occur." The firm added, "We don’t think investors are really concerned about the SaaS-pocalypse for Oracle, as much as the risks associated with execution, margins and financing within Oracle Cloud Infrastructure (OCI)."
Oracle’s stock has fallen 23% so far this year. The company’s shares trade at over 19.17 times its 12-month forward earnings estimate, versus 22.05 for Microsoft on the same basis.
ProPicks AI mention
Separately, investment-screening copy within the report evaluated ORCL alongside thousands of companies using an AI-driven process claiming to weigh 100+ financial metrics. That copy cited historic winners such as Super Micro Computer (+185%) and AppLovin (+157%) in examples of prior picks.
Overall, Oracle’s raised guidance and large RPO increase helped soothe some investor concern about extracting returns from major AI infrastructure spending, even as analysts continue to flag execution, margin and financing risks in cloud operations.