Oracle stock dipped in early trading Tuesday after posting quarterly results with what an Evercore ISI analyst said had "a lot of moving parts." Fiscal third-quarter earnings and sales missed Wall Street forecasts but the database software company said strong cloud and AI demand is accelerating sales growth.
"Oracle served up something for both bulls and bears last night," wrote Evercore ISI's Kirk Materne, who rates Oracle stock as outperform. "While revenue/earnings-per-share came in a bit shy of forecasts, the company blew away expectations for RPO (remaining performance obligations) – $130 billion vs. roughly $105 billion estimates – and guided to 15% revenue growth in fiscal year 2026."
Oracle on Monday reported that it earned an adjusted $1.47 per share on sales of $14.1 billion for the February-ended quarter. Both numbers missed estimates. Analysts polled by FactSet projected Oracle would earn an adjusted $1.49 per share on sales of $14.4 billion. Adjusted earnings rose 4% while sales gained 6% year over year.
But Oracle's leadership encouraged investors to focus on its potential for its cloud business to benefit from enterprise AI spending.
"What we are seeing in the market is that we are the destination of choice for both AI training and inferencing," Oracle Chief Executive Safra Catz said on company's earnings call.
A growing backlog for cloud services is giving the company "clear line of sight to our future revenue growth." That includes a projection of 15% growth in its June-beginning fiscal 2026 and 20% growth in fiscal 2027. That would mark a major acceleration from the 6% average growth of Oracle's previous five fiscal years.
On the stock market today, Oracle stock is down more than 2% at 144.70 in premarket trading.
Oracle's Stargate Contracts Coming 'Fairly Soon'
Meanwhile, sales of Oracle's closely watched cloud-infrastructure business increased 49%, compared with 52% growth for the segment in Oracle's November-ended quarter. Oracle's guidance for the May-ending quarter of 9% revenue growth missed previous forecasts of 9.5% growth.
Oracle's cloud infrastructure business is racing to build out computing capacity for AI startups and other users of the cloud. The Oracle Cloud Infrastructure business rents computing power to other companies, competing against much larger hyperscalers Amazon.com, Microsoft and Alphabet's Google.
Chairman and Chief Technology Officer Larry Ellison said in the press release that Oracle is on track to double data-center capacity during the calendar year. The company now expects capital expenditures to grow to $16 billion for its May-ending fiscal 2025, roughly doubling from a year earlier.
Ellison appeared at the White House in late January with President Donald Trump, OpenAI leader Sam Altman and SoftBank Chief Executive Masayoshi Son to announce an AI infrastructure effort called Stargate. The $100 billion project — which could grow up to $500 billion over the next four years — features Oracle as an initial equity backer.
Investors were anxious for Stargate updates heading into the report.
Catz said in Oracle's press release that "we expect RPO to continue to grow rapidly — as we look forward to signing our first Stargate contract — yet another big opportunity for Oracle to expand both its AI training and AI inferencing businesses in the near future."
On the earnings call, Ellison added that "Stargate looks to be the biggest AI training project out there. And we expect that will allow us to grow our RPO even higher in the coming quarters. And we do expect our first large Stargate contract fairly soon."
Oracle Stock Analyst View On Earnings Report
Following the report, analysts appeared more focused on Oracle's commentary for future demand.
"Q3 in itself was not stellar but Q3 is a seasonally small quarter and often disappoints," wrote Barclays analyst Raimo Lenschow in a client note following the report. "What is more important for the long-term investment case is the very strong RPO growth, in our view, which does not even seem to include benefits from the large Stargate initiative, and the 15% year-over-year growth guidance for FY26 (fiscal year 2026), which both confirm the revenue acceleration story."
Lenschow holds a positive overweight call on Oracle stock.
"While tight data center capacity has demanded some patience from investors, we believe that as we move past some of the capacity constraints in the second half of this calendar year," wrote William Blair analyst Sebastien Naji in a client note Tuesday. Naji rates Oracle stock as outperform.
Further, Oracle said it was increasing its quarterly dividend to 50 cents per share, up from 40 cents per share.
Oracle Stock Down 10% This Year
Prior to the earnings report, Oracle fell 4% in Monday trading. Shares have lost 10.5% so far this year, not including early Tuesday's action, after Oracle stock rallied nearly 60% in 2024 for the company's biggest annual gain since 1999.
Like many stocks that benefited from last year's AI enthusiasm, Oracle stock has been hit by concerns about the returns for its large technology infrastructure investments.
Ahead of the report, Oracle stock had an IBD Composite Rating of 88 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Oracle's IBD Relative Strength Rating is 78 out of 99. The RS Rating means that Oracle has outperformed 78% of all stocks in IBD's database over the past year. But the score is down from 88 just a week earlier.
