Oracle Corporation recently announced its fiscal third-quarter financial results, revealing a mixed performance for the period. The company reported a 6% increase in sales, reaching $14.1 billion, though this fell short of analysts’ expectations of $14.4 billion. Additionally, revenue from Oracle’s cloud infrastructure also missed projections.
Following the announcement, Oracle’s stock experienced a decline, dropping as much as 7.5% after the markets opened. This marked its lowest level since August 2024. Despite this setback, Oracle highlighted a significant increase in bookings, with remaining performance obligations rising to $130 billion, compared to $97.3 billion in the prior quarter. Looking ahead, Oracle forecasts strong growth for its cloud infrastructure business, predicting a 15% sales increase in fiscal 2026 and a 20% rise in fiscal 2027. The company attributes this anticipated growth to the rising demand for computing power to support artificial intelligence workloads. Oracle has secured cloud agreements with major players, including OpenAI, Meta, Nvidia, and AMD, solidifying its position in the AI-driven cloud market.
A notable development is Oracle’s ongoing $100 billion data center project in Texas, part of a joint venture with OpenAI and SoftBank. This initiative, dubbed “Stargate,” is expected to further enhance Oracle’s data center capacity, which is projected to double by the end of the calendar year. However, some uncertainties loom, including the potential impact of a U.S. government ban on TikTok, one of Oracle’s significant cloud customers. TikTok’s future in the U.S. remains uncertain as negotiations for its acquisition by American buyers continue.
Oracle’s capital expenditures for data center expansion reached $5.9 billion in the quarter, significantly higher than analysts’ estimates of $3.8 billion. Despite concerns about overinvestment in data centers and competition from lower-cost AI models, Oracle remains optimistic about its long-term growth potential in the cloud computing sector.