Oracle stock surges on earnings beat, raised revenue guidance
Investing.com -- Oracle (NASDAQ: ORCL) on Tuesday delivered a quarterly top- and bottom-line beat on the back of strong growth in its cloud computing business. The company also raised its fiscal 2027 revenue guidance, sending its shares up about 10% in premarket trading Wednesday.
Austin, Texas-based Oracle in recent years has turned its focus to cloud computing infrastructure, while its core offerings such as database software and enterprise applications for finance continue to bring in revenue.
Oracle said it earned $1.79 per share on an adjusted basis on revenue of $17.19 billion for fiscal Q3 2026. Analysts had expected a profit of $1.70 per share on revenue of $16.92 billion.
The cloud segment saw revenue growth of 44% Y/Y to $8.91 billion.
Commenting on the report, Barclays analyst Raimo Lenschow said the print signals "a clearer path ahead."
"With fundamentals becoming more visible, we can start looking at fundamental valuations again," Lenschow wrote in a post-earnings note. "The ~16x PE ratio (CY27) for a company that will grow revenue and earnings over 30% in the coming years seems very attractive to us."
He reiterated an Overweight rating and lifted the price target to $240 from $230.
Oracle has become a major player in the artificial intelligence space due to its strategy to invest in and build data centers. It was named as a central player by the U.S. government in the Stargate project last year.
“The demand for cloud computing for AI training and inferencing continues to grow faster than supply. Furthermore, some of the largest consumers of AI Cloud capacity have recently strengthened their financial positions quite substantially. These market dynamics enable Oracle to comfortably meet and likely exceed our revenue growth rate forecast for FY27 and beyond,” the company said in a statement.
Since being named in the Stargate project, Oracle has gone on a debt-raising spree in order to support its data center ambitions, including announcing an intent to raise $50 billion dollars in debt and equity financing this year.
Shares of ORCL have been under pressure since hitting an intraday peak at $345.72 in early September of last year. The stock is down 54.5% since then.
Turning to the company’s guidance, Oracle now expects fiscal 2027 revenue to be $90 billion. Its fiscal 2026 revenue outlook of $67 billion and capital expenditure forecast of $50 billion were unchanged.
For its current fiscal Q4 2026, Oracle sees total revenue growth of 19% to 21% in U.S. dollars. Total cloud revenue is expected to grow 46% to 50% in U.S. dollars.