Oracle shares surge 15% to five-week high after strong earnings, upbeat revenue guidance

Shares of Oracle jumped 15% in early trade on the New York Stock Exchange, reaching a five-week high of $171.76 apiece, after the company reported upbeat results for the third quarter of fiscal 2026 and boosted its revenue guidance for fiscal 2027.

The shares had reached a high of $164.51 in extended trading on Tuesday after closing at $149.40 in New York.

Oracle’s overall revenue increased 22% year over year in the fiscal third quarter, which ended on 28 February, according to the company.

Revenue from its closely watched infrastructure business increased 84% to $4.9 billion, while revenue from the cloud applications business expanded 13% to $4 billion, in line with estimates. Revenue from both cloud and infrastructure stood at $8.9 billion.

For fiscal year 2026, the company expects revenue of $67 billion and capital expenditures of $50 billion, which is unchanged from its most recent guidance. For fiscal year 2027, it has raised its total revenue guidance to $90 billion, which also came ahead of analyst estimates of $86.7 billion.

The upbeat revenue forecast eased concerns over its hefty spending on artificial intelligence infrastructure.

While Oracle was a latecomer to the cloud industry, it swiftly recognized the artificial intelligence boom, rapidly building out data centres filled with premium processors for customers such as Meta and OpenAI.

Still, the firm has borrowed heavily to fund the data-centre build-outs, leaving it exposed to any potential downturn in the market. In February, it announced its intention to raise up to $50 billion in debt and equity financing, along with a statement that it does not expect to issue any additional bonds beyond this amount in calendar year 2026.

Oracle’s capital expenditures were about $18.6 billion in the fiscal third quarter, higher than the $14 billion anticipated by analysts.

According to the company, demand for cloud computing for AI training and inferencing continues to grow faster than supply. Furthermore, some of the largest consumers of AI cloud capacity have recently strengthened their financial positions substantially.

Last week, Bloomberg reported that Oracle was planning thousands of job cuts across the company to help trim costs. It has disclosed $1.6 billion in expected restructuring costs in the fiscal year through May, its largest such plan on record.

Oracle shares still down sharply from peak

The stock had lost more than 50% of its value from a September peak through Tuesday’s close, as Wall Street grew worried about the costs and logistics associated with the massive data-center build-out.

Despite the shares witnessing heavy pressure on Wall Street, analysts have largely remained optimistic on the stock, noting that sentiment has shifted from strong confidence to widespread skepticism regarding the company’s long-term financial targets.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.