Oracle Beats Q3 Estimates, Stock Jumps 10% on Cloud Surge
Oracle posts Q3 revenue of $17.2B, up 22% YoY, with cloud infrastructure growing 84%. Stock surges in premarket as company raises 2027 outlook to $90B.
Oracle delivered a strong third-quarter report Monday evening that sent shares jumping more than 10% in premarket trading Wednesday. The enterprise software giant posted revenue of $17.2 billion, up 22% year-over-year, handily beating the $16.9 billion consensus. Earnings per share came in at $1.79, above the $1.70 estimate.
The cloud business was the standout. Total cloud revenue hit $8.9 billion, up 44% from a year ago. Cloud infrastructure—Oracle's fastest-growing segment—generated $4.9 billion, an 84% increase that reflects the company's aggressive push into AI workloads.
The AI Contract Machine
What caught analysts' attention was the remaining performance obligations figure: $553 billion, up 325% from last year. Most of that increase came from large-scale AI contracts where Oracle won't need to raise additional capital to fulfill the commitments. That's a meaningful distinction—it suggests these deals are high-margin and already funded.
CEO Safra Catz raised the company's fiscal 2027 revenue outlook to $90 billion, up from previous guidance. The implied growth rate puts Oracle in rare company among enterprise software vendors.
Cloud Infrastructure Finds Its Groove
Oracle Cloud Infrastructure has emerged as a legitimate third option behind AWS and Azure for enterprises building AI applications. The 84% growth in IaaS isn't just about catching up—it reflects a broader hyperscaler spending surge that's lifted infrastructure players across the board.
The company's multi-cloud strategy, which allows customers to run Oracle databases on competing clouds, has removed a key adoption barrier. And the co-location deals with Microsoft and Google announced last year are starting to show up in the numbers.
How Oracle Stacks Up
| Metric | Q3 FY26 | Q3 FY25 | Change |
|---|---|---|---|
| Revenue | $17.2B | $14.1B | +22% |
| Cloud Revenue | $8.9B | $6.2B | +44% |
| Cloud Infrastructure | $4.9B | $2.7B | +84% |
| EPS | $1.79 | $1.41 | +27% |
The quarter continues a pattern we've seen across enterprise tech: AI infrastructure spending is pulling forward IT budgets that might otherwise be allocated over multiple years. IBM's recent results showed a similar dynamic, with AI bookings doubling.
What's Priced In
At roughly $149 premarket, Oracle trades at about 22 times forward earnings—a premium to its historical range but below the multiples commanded by pure-play cloud names. The $90 billion revenue target for fiscal 2027 implies the company sees continued acceleration.
Bears will point to the heavy capital requirements of building out data center capacity. But the RPO growth suggests Oracle is locking in long-term contracts before committing the capex, reducing execution risk.
For more on the earnings season, Oracle joins a growing list of enterprise names posting AI-driven beats. The question now is whether the infrastructure buildout can sustain this pace through the back half of 2026.