Oracle Q3 Earnings Preview: What to Expect Ahead of the Report

Oracle (NYSE: ORCL) is scheduled to report its fiscal third-quarter earnings after the market close on Monday, March 10, 2025. The company is expected to post earnings per share (EPS) of $1.49 on $14.4 billion in revenue, reflecting 6% year-over-year EPS growth and 8% revenue growth. Oracle’s market capitalization stands at $421 billion, with trailing twelve-month revenue of $55 billion, operating profits of $17 billion, and net income of $12 billion.

Stock Performance and Market Sentiment

Oracle shares have been under pressure recently, declining 7% in the past five days amid broader market weakness tied to President Trump’s tariff policies. The technology sector has faced headwinds, with software stocks broadly down 13%, adding to ORCL’s recent struggles. Additionally, concerns about AI competition from Chinese startup DeepSeek have weighed on sentiment, particularly after Oracle’s fiscal Q2 results in December fell slightly short of expectations.

After rallying nearly 60% in 2024, oracle stock has fallen 20% from its peak in November, now trading around $150. The stock also recently dipped below its 200-day moving average, signaling possible technical weakness heading into earnings. However, some analysts view this pullback as an opportunity, given Oracle’s long-term AI and cloud growth potential.

Impact of the U.S. Dollar on Oracle's Results

The strong U.S. dollar hurt Oracle's Q2 guidance, as nearly 50% of its revenue comes from international markets. A stronger dollar reduces the value of foreign sales when converted back into U.S. dollars, weighing on Oracle’s top-line performance. However, the dollar has weakened 6% since mid-January, which could provide a modest tailwind for Q3 results. Investors will closely watch how much this reversal impacts revenue and forward guidance.

AI Opportunities and Oracle’s Competitive Position

Oracle remains heavily invested in AI and cloud infrastructure, which is driving its long-term growth strategy. Analysts estimate that AI-driven revenue could reach $10 billion annually, largely fueled by Oracle’s Infrastructure-as-a-Service (IaaS) business, which grew 52% last quarter. The company is also playing a key role in the $100 billion Stargate AI initiative, alongside SoftBank, OpenAI, and MGX, a project that could significantly boost Oracle’s AI computing and cloud market share.

Analysts, including Guggenheim’s John Difucci, expect IaaS revenue growth of 51.5% this quarter, a critical metric that could determine the post-earnings reaction. Jefferies analyst Brent Thill argues that sustaining cloud infrastructure growth above 50% is necessary to prove Oracle’s AI business remains strong.

Analyst Sentiment and Key Themes Going Into the Report

Analysts are cautiously optimistic heading into the Q3 print but recognize that Oracle has higher hurdles to clear than in previous quarters. Key areas of focus include:

- Cloud Infrastructure Growth: Consensus expects IaaS revenue to increase 51.5%. If Oracle delivers above this level, it could ease recent investor concerns about AI-related spending and demand.

- AI Revenue Visibility: Investors will look for commentary on AI-driven deals and potential long-term revenue streams, particularly from Stargate.

- Large Contracts & RPO Growth: KeyBanc forecasts Oracle’s remaining performance obligations (RPO) to increase by $7.9 billion, well above the Street's $6.2 billion estimate. Strong bookings could reassure investors about future demand.

- Currency Impact & Guidance: With a weaker U.S. dollar, Oracle may see some upside in Q3 results, but forward-looking guidance will be crucial.

Potential Risks and Areas of Concern

Despite Oracle’s long-term AI opportunity, there are several risks that could weigh on the stock:

- Competition: DeepSeek’s recent AI developments and continued competition from Microsoft, Amazon, and Google Cloud could pressure Oracle’s AI positioning.

- Capital Expenditures: Oracle’s CAPEX spending is expected to rise nearly 40% in 2025, which may weigh on free cash flow in the short term.

- Macroeconomic Uncertainty: The tech sector remains volatile, and further tariff-related disruptions could dampen growth expectations.

Bottom Line: Can Oracle Regain Momentum?

Oracle needs a strong earnings report and AI-driven revenue acceleration to break out of its current downtrend. While shares are trading at a discount to the software sector, at 22.2x forward EPS vs. the sector’s 34.2x, execution is key. Investors will be watching whether Oracle’s cloud and AI business can sustain its momentum, particularly in IaaS revenue growth and new AI-driven contracts.

A positive surprise in cloud growth and AI visibility could trigger a rebound, while disappointing results or weak guidance may extend the stock’s recent decline.