Oracle Stock Jumps After Earnings Report Shows AI-Related Gains

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Naomi Buchanan
Naomi Buchanan
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Naomi Buchanan is a reporter at Investopedia breaking down news stories that impact investors.
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Updated March 12, 2024
Oracle

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Key Takeaways

  • Oracle was the best-performing stock in the S&P 500 Tuesday morning after the company reported results that beat analysts' expectations and highlighted its position amid the artificial intelligence (AI) boom.
  • The company's revenue for the fiscal third quarter came in at $13.3 billion, while net income and earnings per share (EPS) were $4 billion and $1.41, respectively, beating analyst estimates and showing growth from the previous quarter and the same period a year prior.
  • Oracle reported record high total remaining performance obligations of $80 billion driven by new cloud infrastructure contracts, 43% of which CEO Safra Catz said will be realized into revenue in the next four quarters.
  • Nvidia, McDonald's, Walmart, and Uber are among those using Oracle's cloud offerings.
  • Oracle is set to deliver new healthcare-focused offerings in the coming quarter, which CTO Larry Ellison said could be "a high-growth business for years to come."

Oracle (ORCL) was the best-performing stock in the S&P 500 Tuesday morning after the company reported results that beat analysts' expectations and showcased its position to gain as enterprise cloud customers integrate artificial intelligence (AI) tech.

The company reported third-quarter revenue for the 2024 fiscal year of $13.3 billion, landing slightly above analyst estimates compiled by Visible Alpha and showing a 7% year-over-year gain.

Oracle's net income for the quarter was $4 billion, surpassing analyst estimates and up from the previous quarter and year-ago period. Earnings per share (EPS) at $1.41 exceeded analysts' expectations and rose 16% from the previous year.

The company's total remaining performance obligations or the total value of ordered products yet to be delivered to customers reached an all-time high at $80 billion driven by "large new cloud infrastructure contracts signed in Q3."

Oracle "expect[s] to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply—despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly," CEO Safra Catz said.

Catz said that the company expects 43% of the $80 billion backlog to be "recognized as revenue over the next four quarters" adding that Oracle's "Gen2 Cloud Infrastructure business will remain in a hypergrowth phase—up 53% in Q3—for the foreseeable future."

Nvidia (NVDA), McDonald's (MCD), Walmart (WMT), and Uber (UBER) are a few of Oracle's customers using its cloud technology.

After transferring most customers from Cerner, a health information tech company that it acquired in 2021, to Oracle's Gen2 Cloud infrastructure in the third quarter, the company is set to "start delivering its completely new Ambulatory Clinic Cloud Application Suite to these same customers," CTO Larry Ellison said.

Ellison added that "the delivery of this revolutionary new healthcare technology will enable the rapid modernization of our customers' health systems over the coming year, and transform Cerner and Oracle Health into a high-growth business for years to come."

Oracle shares surged over 10% to $126 as of 10:20 a.m. ET on Tuesday. The stock has gained about 50% of its value over the past year.

(Update—March 12, 2024: This story has been updated with share price information.)

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  1. Oracle. "Oracle Announces Fiscal 2024 Third Quarter Financial Results."

  2. Oracle. "Customer highlights from Q3 FY24 earnings."

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