Oracle shares rose sharply in premarket trading after stronger-than-expected quarterly results showed accelerating demand for its artificial-intelligence infrastructure and eased some concerns about the company’s expensive data-centre expansion.
The stock gained approximately 5.5% to $161.30 before the US market opened on Friday. If that increase holds during regular trading, it could add around $24 billion to Oracle’s market value.
The rebound followed a difficult period for the software and cloud-computing company. Oracle shares had fallen more than 21% since the beginning of 2026, while the S&P 500 had advanced nearly 11%.
Investor concerns centred on whether Oracle could turn its rapidly growing pipeline of AI contracts into revenue and cash flow quickly enough to justify its heavy spending. The latest results provided some evidence that demand is converting into business, although the company still faces substantial financial and operational requirements.
AI Contracts Lift Oracle’s Backlog
Oracle booked more than $30 billion in additional AI cloud contracts during its first fiscal quarter, taking its total revenue backlog to $664 billion.
The figure exceeded the $639.89 billion expected by analysts tracked by Visible Alpha. It was also approximately $209 billion higher than the level reported a year earlier.
Oracle describes this backlog as remaining performance obligations, or RPO. It represents contracted revenue that has not yet been recognised because the related products or services have not been delivered.
A large backlog provides visibility into future demand, but it is not the same as revenue already earned or cash received. Some contracts may run for several years, and their conversion will depend on Oracle building sufficient data-centre capacity and delivering the agreed computing services.
The company said demand for its AI cloud training and inference services continues to grow faster than available supply.
AI training involves using large quantities of computing power to develop or improve a model. Inference takes place after that model has been deployed and produces an answer, image, prediction or other output in response to a request.
Both activities require specialised processors, high-speed networking, storage systems, electricity and cooling. Oracle is attempting to provide these resources through Oracle Cloud Infrastructure while competing with larger cloud businesses operated by Amazon, Microsoft and Google.
The company’s infrastructure revenue climbed 121% year-on-year to approximately $7.4 billion during the quarter. Overall cloud revenue increased 62% to $11.61 billion.
By comparison, revenue from Oracle’s traditional software operations declined around 3% to $5.55 billion. The difference shows how rapidly the centre of the company’s growth is shifting from conventional software licences towards cloud infrastructure and subscription services.
Quarterly Revenue and Profit Beat Expectations
Oracle reported total revenue of approximately $19.34 billion for the three months ended August 31, an increase of 30% from the same period a year earlier.
The result was above the $19.14 billion expected by analysts. Adjusted earnings reached $1.92 per share, comfortably exceeding the average estimate of $1.74.
Net profit increased 60% to $4.76 billion, or $1.56 per share, from $2.93 billion and $1.01 per share a year earlier.
The company also raised its full-year adjusted earnings forecast to at least $8.10 per share from its previous projection of $8.05. Analysts had expected approximately $8.07.
Oracle maintained its forecast for annual revenue of at least $90 billion. For the current quarter, it expects revenue to increase between 30% and 34%, while total cloud sales are projected to rise between 64% and 70%.
These figures helped reassure investors that the company is gaining commercial momentum from rising AI spending. However, revenue growth alone does not settle the debate surrounding Oracle’s strategy.
The company must invest heavily before many of its signed contracts begin generating revenue. Constructing a data centre requires suitable land, power connections, advanced chips, cooling equipment, networking systems and regulatory approvals.
Labour shortages, permitting delays and limited electricity availability can slow the process. Delayed capacity would also postpone the revenue associated with Oracle’s backlog.
Data-Centre Spending Remains the Main Risk
Oracle spent $28.5 billion on capital expenditure during the first quarter, compared with approximately $8.5 billion a year earlier.
It continues to expect full-year capital expenditure of between $90 billion and $95 billion. This spending is primarily supporting data centres and the computing equipment required to serve AI customers.
The scale of that investment has placed pressure on cash flow and increased concerns about borrowing. In July, S&P Global lowered Oracle’s credit rating, citing weaker cash generation and the rising business risk associated with its expansion.
Oracle reported negative free cash flow of $5.40 billion for the quarter. While this means the company spent more cash than it generated after capital expenditure, the result was substantially better than the negative $9.56 billion expected by analysts.
It was also below the $11.48 billion cash outflow recorded during the third quarter of fiscal 2026.
Customer financing is helping Oracle manage part of the investment burden. Approximately $11.36 billion of its first-quarter capital spending was covered through prepayments from customers.
The company has also said that many of its latest AI contracts will not require large amounts of additional Oracle-funded infrastructure. In some arrangements, customers pay in advance or install their own hardware inside Oracle-operated facilities.
These structures can reduce Oracle’s immediate capital requirements, but they do not remove execution risks. The company must still provide reliable facilities, power, networking and technical support over the lives of the contracts.
Investors will now watch how quickly the $664 billion backlog becomes recognised revenue and whether cloud growth can produce enough cash to support Oracle’s expansion.
The premarket share increase indicates that the latest figures have reduced some immediate concerns. The longer-term test will be whether Oracle can maintain its cloud growth while controlling debt, completing data centres on schedule and improving free cash flow.
