What happened
Oracle projected its AI data centre strategy will drive revenue above Wall Street estimates through 2027, raising its fiscal 2027 forecast to $90 billion, exceeding analysts' $86.6 billion. Remaining performance obligations (RPO) grew 325% year-over-year to $553 billion in Q3, surpassing $540.37 billion estimates, largely due to AI contracts. The company reported Q3 total revenue of $17.19 billion, exceeding $16.91 billion analyst estimates, with shares rising 8.3%. Oracle builds data centres for partners like OpenAI and Meta, using AI coding tools with smaller engineering teams.
Why it matters
Oracle's financial performance validates investment in AI infrastructure, shifting cloud unit economics. Its strategy combines building data centres for partners with integrating high-margin database services and lower-margin AI chip rentals (30-40% margins), improving overall cloud profitability. RPO growth of 325% year-over-year to $553 billion, driven by AI contracts, demonstrates sustained demand and long-term revenue visibility. This follows Oracle's recent workforce restructuring. Procurement teams and investors should note the shift towards bundled AI infrastructure and services.
Subscribe for Weekly Updates
Stay ahead with our weekly AI and tech briefings, delivered every Tuesday.
