Prime Highlights-
- Oracle’s stronger-than-expected results reassured investors about its large AI-driven investment strategy and long-term growth plans.
- Oracle’s rising market value reflects growing confidence in its ability to convert AI cloud contracts into strong returns.
Key Facts-
- Oracle’s revenue backlog rose to $664 billion, beating estimates of $639.89 billion.
- Oracle secured over $30 billion in new AI cloud contracts last quarter.
Background-
Oracle shares advanced 5.5% in premarket trading after the cloud computing and software company delivered stronger-than-expected quarterly results, reassuring investors about its large AI-driven investment plans.
The Austin, Texas-based firm added more than $30 billion in new AI cloud contracts during the first fiscal quarter, lifting its revenue backlog to $664 billion, above analyst estimates of $639.89 billion, according to Visible Alpha data.
The results mark a strong step forward for Oracle as it works to keep pace with hyperscale rivals through sizable AI investments, offering fresh clarity on when that spending will begin paying off.
J.P. Morgan analysts said the results should give investors confidence on key questions, including the durability of Oracle’s backlog growth, the pace at which it converts into revenue alongside data center timelines, and the outlook for future capital raises.
Oracle shares have adjusted by more than 21% so far this year, compared with a nearly 11% gain for the S&P 500, though the latest rally marks a meaningful step toward closing that gap.
Lale Akoner, market strategist at eToro, said Oracle’s focus now centers on demonstrating that its large data center investment can generate strong long-term returns. She added that the results help confirm Oracle is building capacity in line with demand.
Oracle stands to add about $24 billion in market value at its current share price of $161.30, should the gains hold. The stock trades at 16.86 times forward earnings, a more attractive valuation than Microsoft’s 23.84 multiple and Amazon’s 22.58, according to LSEG data.