Oracle shares climbed about 5.5% in premarket trading on Friday after the company reported more than $30 billion in new AI cloud contracts during its latest quarter. The surge pushed Oracle’s remaining performance obligations to a record $664 billion, exceeding Wall Street expectations and easing some concerns about the company’s heavy spending on artificial intelligence infrastructure.
Oracle shares rose sharply on Friday after the technology company reported stronger than expected quarterly results and a surge in demand for its artificial intelligence cloud services.
The company booked more than $30 billion in additional AI cloud contracts during its fiscal first quarter, lifting its remaining performance obligations (RPO) to $664 billion. RPO represents contracted revenue that Oracle has not yet recognized as sales.
The figure was above the $639.89 billion expected by analysts, according to Visible Alpha data cited by Reuters. The stronger backlog helped push Oracle shares about 5.5% higher in premarket trading.
Oracle's results come as the company continues to invest heavily in data centers and computing infrastructure to meet rapidly growing demand for AI services. Its cloud infrastructure revenue increased 121% year over year to about $7.4 billion, helping drive total cloud revenue 62% higher to $11.61 billion.
For the quarter ended August 31, Oracle reported total revenue of $19.34 billion, up 30% from a year earlier. Adjusted earnings were $1.92 per share, above the $1.74 expected by analysts surveyed by FactSet. Net profit rose 60% to $4.76 billion.
The company also maintained an ambitious investment plan. Oracle expects capital expenditure of between $90 billion and $95 billion for the fiscal year as it expands its AI and cloud infrastructure.
The rapid growth in its contract backlog has become an important measure for investors because Oracle must convert those signed commitments into future revenue while managing the cost of building the infrastructure required to serve customers.
Reuters reported that analysts continue to focus on whether Oracle can sustain its backlog growth and generate sufficient cash flow from its large data-center investments. The company had also fallen more than 21% this year before Friday's premarket recovery, compared with a gain of nearly 11% for the S&P 500.
Oracle raised its adjusted earnings outlook for the fiscal year to at least $8.10 per share, from $8.05 previously, while maintaining its expectation for at least $90 billion in revenue. For the current quarter, the company expects revenue growth of between 30% and 34%.
The latest results give investors further evidence of strong demand for Oracle's AI cloud infrastructure, while the company's ability to turn its record backlog into profitable revenue remains a key issue for the stock.
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