Oracle Corporation (ORCL) saw its shares climb more than 8% in Monday's trading session, reaching $244.73 and boosting its market capitalization to $712.5 billion. The rally was fueled by stronger-than-expected fiscal third-quarter earnings and accelerating demand for artificial intelligence and cloud infrastructure services.
The software giant reported earnings per share of $1.79 on revenue of $17.2 billion, surpassing analyst estimates of $1.70 per share and $16.92 billion in revenue. Cloud revenue jumped 44% to $8.9 billion, with cloud infrastructure revenue alone rising 84% to $4.9 billion. Multicloud database revenue, which allows Oracle databases to run on other cloud platforms, surged an impressive 531%.
Investors are increasingly focused on Oracle's remaining performance obligations (RPO), which represent revenue under contract but not yet recognized. The company's RPO reached $553 billion at the end of the fiscal third quarter, a staggering 325% increase from the prior year. This backlog provides significant visibility into future revenue streams, though it also raises questions about the pace of contract conversion.
Oracle projects fiscal 2026 revenue of $67 billion and plans $50 billion in capital spending, primarily for data center expansion. The company has indicated it may raise between $45 billion and $50 billion in 2026 through debt and equity to fund its cloud infrastructure growth, according to a Reuters report from February. This heavy spending has drawn scrutiny from investors concerned about cash flow and the sustainability of returns.
Wedbush analyst Dan Ives described Oracle's quarterly report as a "huge relief" for investors who had been nervous about data-center spending. Ives views Oracle as positioning itself as a "foundational infrastructure provider for the AI Revolution," a sentiment echoed by other bullish analysts on Wall Street.
However, bearish bets have emerged. A Securities and Exchange Commission filing revealed that Situational Awareness LP held a $1.07 billion put-options position against Oracle, covering 7.293 million shares as of March 31. Put options increase in value when a stock declines, signaling skepticism about the company's near-term prospects.
Oracle's rise stood out compared to other major cloud and AI infrastructure stocks. Microsoft (MSFT) gained roughly 2.6%, while Amazon (AMZN) dropped about 3.2% and Alphabet (GOOGL) fell around 1.4% on Monday. The divergence highlights Oracle's unique positioning amid the AI arms race.
The key risk for Oracle remains whether it can convert its massive AI contract backlog into recognized revenue quickly enough to offset the heavy costs of building out data centers. If AI demand softens or new facilities take longer to fill, the company could face increased debt burdens before revenue materializes. For now, the market is betting on Oracle's ability to execute, but the stakes are high.
