Today I want to talk about something that caught the market’s attention after the close. Oracle announced its third-quarter results, and they were the kind of results that surprise even analysts.
Let’s be honest for a moment. Oracle had been in a very difficult position. The stock had fallen more than 50% from its September highs. Analysts were lowering their price targets. And many investors were asking the same question: what if the massive AI capital spending never actually pays off?
The Results
Oracle reported $1.79 in earnings per share (non-GAAP), while analysts were expecting around $1.69–$1.70. That’s a $0.10 beat.
Total revenue reached $17.19 billion, compared with Wall Street expectations of roughly $16.91 billion. That is $280 million above estimates, representing almost 22% growth compared with last year.
And here is something remarkable. This was the first quarter in more than 15 years where both organic revenue and non-GAAP earnings per share grew by 20% or more at the same time.
Net income increased to $3.72 billion, up from $2.94 billion last year.
But the real story is not those numbers.
The real story is the cloud.
AI Cloud Is Exploding
Cloud revenue reached $8.9 billion, up 44% year over year. Revenue from cloud infrastructure alone (IaaS) surged 84% to $4.9 billion.
If you still think Oracle is just the old database company, it might be time to rethink that. More than 50% of its revenue now comes from cloud services. The company has essentially transformed itself in front of our eyes.
The cloud database segment grew 35%, while multicloud database revenue surged 531%. Yes, 531%.
And who is driving all this demand? The biggest players in tech. Companies like Meta, NVIDIA, OpenAI, and xAI are all racing to build massive AI infrastructure. And Oracle is securing the contracts.
In fact, Remaining Performance Obligations, which represent already signed contracts for future revenue, jumped to $553 billion, a 325% increase year over year. That means demand is not slowing down. It is accelerating.
There was also an important detail. The company said it does not need to raise new capital to support these massive AI contracts. In many cases, customers either prepay, or buy the GPUs themselves and deliver them to Oracle.
The Guidance
And this is where things get even more interesting.
For the next quarter, Oracle expects earnings between $1.96 and $2.00 per share. Analysts were expecting $1.69. That is a very large gap.
Cloud revenue is expected to grow between 46% and 50%.
For the full fiscal year, the company is targeting $67 billion in revenue. For the following fiscal year, it raised its revenue target to $90 billion, with capital expenditures of $50 billion. Wall Street was expecting around $86 billion, but Oracle says it will reach $90 billion.
The market reacted immediately. The stock jumped more than 7% in after-hours trading.
One last detail that I find very interesting. The company said it is using AI code generation to restructure its software development teams into smaller, more flexible, and more productive units. In other words, it is building more software, faster, and at a lower cost.
The Investment Takeaway
For me, these results highlight something very important.
Over the past few weeks the market has been full of doubts. Are AI capital expenditures really going to pay off? Has Oracle promised more than it can actually deliver?
The stock had fallen more than 50% from its highs.
And yesterday, instead of answering those doubts with promises, the company answered with numbers.