Oracle Stock Soars 25% on $4550 Billion Order Backlog

Oracle Corporation has reported a significant surge in its stock price following the announcement of multiple large contracts worth tens of billions of dollars in the fiscal quarter ending August 31. This has led to a substantial increase in the company's backlog of orders, driving its stock price up by over 25% in after-hours trading.

The company revealed that its remaining performance obligations (RPO), which represent signed but unrecognized revenue, reached 4550 billion dollars at the end of the quarter. This figure is more than four times higher than the same period last year and significantly exceeds the 1380 billion dollars reported in the previous quarter.

Chief Executive Officer Safra Catz highlighted that Oracle secured four major contracts with three clients during the quarter and expects more similar deals in the coming months. This surge in orders is expected to push the backlog beyond 5000 billion dollars. "This has been an astonishing quarter, with demand for Oracle's cloud infrastructure continuing to grow," Catz stated.

Despite the strong growth, the overall financial performance was mixed. Revenue for the quarter grew by 12% year-over-year to 149.3 billion dollars, slightly below market expectations of 150.4 billion dollars. Cloud revenue increased by 28% to 72 billion dollars, while software revenue decreased by 1% to 57 billion dollars.

Oracle is accelerating its cloud business expansion to compete with giants like Amazon, Microsoft, and Google, driven by the increasing demand for AI computing. Catz noted that Oracle's cloud infrastructure revenue is projected to grow by 77% to 180 billion dollars for the fiscal year, with further growth expected in the following years, reaching 320 billion dollars, 730 billion dollars, 1140 billion dollars, and 1440 billion dollars respectively. "Most of this five-year forecast is already reflected in our current backlog," she added.

The company also reported a net income of 29.3 billion dollars, or 1.01 dollars per share, which is roughly in line with the previous year. Adjusted earnings per share were 1.47 dollars, slightly below the market expectation of 1.48 dollars.

Oracle's backlog of orders has surged to 4550 billion dollars, driven by significant contracts with leading AI companies. This growth is largely attributed to Oracle's ability to provide critical infrastructure for training advanced AI models, positioning the company as a key player in the AI landscape.

Oracle's cloud infrastructure revenue is projected to grow by 77% to 180 billion dollars for the fiscal year, with further growth expected in the following years. The company's strategic investments in AI and cloud technologies are aimed at capturing a larger share of the growing AI market, which is expected to be significantly larger than the AI training market.

Oracle's new "AI database" is designed to enable enterprises to securely leverage large language models for analyzing their private data. This technology allows data to be vectorized, making it understandable by AI models while ensuring data security. Oracle's cloud platform integrates with leading AI models, providing clients with a comprehensive solution for AI-driven insights.

To support the growing demand and future growth projections, Oracle has increased its capital expenditure guidance to approximately 350 billion dollars for the fiscal year. This investment is primarily focused on acquiring revenue-generating equipment, ensuring efficient use of capital.

Oracle's technological advantages, particularly in high-speed networking, are cited as key factors in its ability to offer cost-effective AI training solutions. The company's strategic focus on AI and cloud technologies positions it well to capitalize on the growing demand for AI-driven solutions.