Oracle shares rise as AI cloud backlog beats estimates

Sept 11 (Reuters) - Oracle shares ‌rose 5.5% ​premarket ​on Friday after the cloud computing and software company's stronger-than-expected quarterly results eased concerns around its ‌massive debt-driven spending spree.

The Austin, Texas-based firm booked more ⁠than $30 billion of additional AI cloud contracts in the first fiscal quarter, ‌boosting its revenue backlog ‌to $664 billion, above analyst estimates of $639.89 billion, according to data from Visible Alpha.

Oracle's upbeat results follow a period of ​underperformance, as the company races to keep pace with hyperscale rivals, with mounting debt and squeezed cash flows ⁠raising doubts over when its massive AI spending will pay off.

The results should address ​key investor concerns including whether Oracle's backlog growth can be sustained, its conversion into revenue amid ​data center delays, and the need ‌for further capital raises, J.P. Morgan analysts said.

Its shares were down more than 21% so ⁠far this year, compared with a nearly 11% rise in the benchmark S&P 500 index.

"Oracle's problem has not been finding customers, ⁠but proving that its enormous data centre build-out can eventually generate enough ​cash to justify the cost. The results should nevertheless ease fears that Oracle is building ahead of demand," said Lale Akoner, etoro market ‌strategist.

Oracle is set to add about $24 billion in market value at the current share price ‌of $161.3, if gains hold.

The stock trades at 16.86 times its ⁠forward earnings estimates, compared with ‌Microsoft's 23.84 multiple ​and Amazon's 22.58, according to data compiled by LSEG.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Harikrishnan ‌Nair)

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