Oracle reported its fourth quarter earnings after the bell on Wednesday, beating Wall Street’s expectations on top and bottom lines but missing on cloud revenue.
Oracle also said it will raise $40 billion to finance its data center with a mixture of debt and equity sales.
Oracle reported earnings per share (EPS) of $2.11 on revenue of $19.18 billion. It performed better than the EPS of $1.97 and revenue of $19.09 billion that analysts estimated.
Its cloud business revenue, which includes cloud applications and cloud infrastructure was under the expected $9.99 billion at $9.01 billion.
Cloud revenue was $4.13 billion, below Wall Street’s estimates of $4.17 billion. Cloud infrastructure brought in $5.79 billion, higher than the $5.72 billion expectations.
Even though Oracle missed on its cloud revenue, it still reaffirmed its 2027 revenue guidance of $90 billion.
Remaining Performance Obligations (RPOs), a measure of contracts the company has signed but hasn’t delivered on, was $638 billion, above the $589.5 billion expectations.
RPOs show the overall demand for a company’s cloud services, which have become integral to know amid the AI revolution.
Investors though are concerned that guidance wasn’t raised, which could mean they’re looking to move somewhere else. The company seems confident in its 2027 revenue expectations which could mean they have deals in the works. Remember, Oracle already had a $300 billion with OpenAI for 5 years, plus the company’s AI demand is high as we see with its RPOs.
This company is far from a sell, it’s in a situation like Broadcom where its expectations might be too high. I think Oracle has room to bring in more AI contracts and is looking to use its OpenAI deal as leverage for other companies. With the rapid growth of AI, I can see Oracle locking down more data center contracts in the near future. I would absolutely buy the dip, the company has a bright future ahead. Oracle is just in a game where it’s doing well but so many other companies are doing better, and investors want faster money.
