Oracle stock (ORCL) surged 7% to 9% in after-hours trading following its Q3 FY2026 earnings beat, driven by strong performance across its AI and cloud businesses. This release has eased recent rising investor concerns about heavy spending on AI data centers, weighing on profits before demand shows up in the numbers.
Oracle Strengthens Position in the AI Ecosystem
The software and cloud infrastructure giant’s quarterly earnings have topped Wall Street expectations on nearly every key measure. Despite months of turbulence for the stock, the surge extended trading, offering a clear sign of the demand for AI infrastructure remaining as strong as ever. The results covered Oracle’s fiscal third quarter, which ended on February 28.
The figures signaled accelerating momentum across the firm’s most vital growth areas. The earnings per share for the quarter were reported as $1.79, ahead of analyst expectations of $1.70. The total revenue the firm bagged was $17.19 billion, topping the $16.91 billion consensus estimate, and overall revenue grew 22% year over year. The net income rose to $3.72 billion from $2.94 billion in the same quarter a year earlier.
Oracle’s cloud revenue arguably generated the most exciting figure. The company reported $8.9 billion in total cloud revenue, including both infrastructure and software as a service. Its cloud infrastructure revenue alone surged 84% to $4.9 billion, which accelerated a meaningful growth rate of 68% in the prior quarter.
Additionally, the firm’s backlog surged to $553 billion, more than four times higher than a year ago. Oracle reported that most of its increase came from large AI infrastructure contracts, adding that the demand for AI computing still exceeds Oracle’s available capacity, which is why the firm is continuously contributing to expanding its data centre network.
Oracle has become a major player in the artificial intelligence space because of its strategic investment in building data centres, which are powered by thousands of Nvidia H100/H200 and Blackwell GPUs. The firm was named as a central player in artificial intelligence by the U.S. government in the Stargate project last year.
Cloud Revenue Forecast Signals Continued Expansion
Turning to Oracle’s guidance, the management delivered a guidance update that gave investors additional reasons for optimism. The firm now expects fiscal 2027 revenue to be $90 nillion. Its fiscal 2026 revenue outlook of $67 billion and capital expenditure forecast of $50 billion were unchanged.
For the current fiscal Q4 2026, Oracle is expecting total revenue growth of 19% to 21% in U.S. dollars. Total cloud revenue is expected to grow 46% in U.S. dollars.
The stock dipped more than 50% from its September highs due to concerns about AI spending. Ironically, the same concerns have now driven the stock higher. Wall Street’s wariness about the firm’s significant debt load and competitive pressure from larger cloud rivals like Amazon Web Services and Microsoft.
Strong Buy Consensus from Wall Street
Oracle has won major contracts from AI firms like OpenAI to deliver their cloud infrastructure, but has operated with less cash flow compared to its competitors. Additionally, the firm also reported $13.18 billion in negative cash flow over the past 12 months, a figure that has contributed to the lingering investor concern even as the business itself continues to grow. However, the firm said that AI coding tools have become efficient enough now to build more software in less time with smaller and more agile teams. This shift will allow Oracle to develop more software-as-a-service applications across more industries at a lower cost.
Analysts called the results a ‘huge relief’, as they eased concerns about AI spending delays. The consensus rating is strong buy, with an average price target implying 74% upside. The stock’s rally reflects renewed confidence that Oracle’s massive investments in AI data centres are translating into real revenue, particularly in AI-driven infrastructure and database services.
