Oracle's earnings report shines: cloud business shows strong growth, backlogged orders hit new highs, promising future ahead

Oracle’s latest financial report has sparked strong market attention. Its third-quarter performance fully exceeded Wall Street expectations, causing the stock to rise over 8% after hours. The earnings report shows that the company’s revenue for the quarter reached $17.2 billion, a 22% year-over-year increase, surpassing analyst forecasts of $16.89 billion by nearly $180 million. Net profit grew 26.5% year-over-year to $3.72 billion. Non-GAAP operating profit increased 19% to $7.38 billion, with an operating margin of 43%, both exceeding market expectations.

Cloud business was the biggest highlight of this earnings report. Oracle Cloud revenue for the first time surpassed 50% of total revenue, reaching $8.9 billion, a 44% year-over-year increase. Cloud Infrastructure (IaaS) revenue soared 84% year-over-year to $4.9 billion, accelerating from the previous quarter and far exceeding analysts’ expected 79%. Cloud applications revenue grew 13% to $4 billion, in line with market expectations. The company’s backlog (RPO) surged 325% year-over-year to $553 billion, mainly driven by demand from large-scale AI contracts.

In terms of profitability, Oracle’s diluted earnings per share increased 24% year-over-year to $1.27, with a 16% increase excluding currency effects. Non-GAAP operating profit margin, though down 1 percentage point from last year to 43%, still beat analysts’ expectations of 42.7%. Management noted that the demand for cloud computing needed for AI training and inference continues to outpace supply, becoming a key driver of performance growth.

For forward guidance, Oracle maintained its revenue target of $67 billion for fiscal 2026 and its capital expenditure plan of $50 billion. It also raised its revenue forecast for fiscal 2027 to $90 billion, up 3.8% from the previous market expectation of $86.7 billion. The company emphasized that some large AI cloud clients have recently improved their financial health significantly, providing strong support for its long-term growth goals. Wedbush analyst commented that this earnings report “put investors at ease,” demonstrating that Oracle has successfully turned its AI business into real revenue.

Regarding market concerns over funding, Oracle revealed that it has raised $30 billion of the $50 billion investment plan. Analysts believe this development will effectively ease investor worries about the company’s ability to finance data center construction. As AI demand continues to rise, Oracle is gradually establishing its leading position in the global cloud computing market by accelerating cloud infrastructure deployment and AI contract execution.