Oracle’s cloud sales beat estimates as surging AI demand outpaces supply
Firm is embarking on a major buildout of data centres for OpenAI and other customers
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ORACLE’S cloud computing business grew faster than analysts projected, signalling the company’s big bets on large AI data centre projects are paying off.
Sales in the closely watched cloud infrastructure business jumped 121 per cent to US$7.4 billion, the company said on Thursday (Sep 10) in a statement. Analysts, on average, expected the division to post US$7.19 billion in sales, according to data compiled by Bloomberg.
The company also said it completed a plan to sell US$20 billion of equity from time to time at market value. Ahead of Thursday’s earnings, several analysts had raised questions about the timing of the at-the-market equity sale.
Oracle, long known for its database software, has refashioned itself as a provider of computing power for artificial intelligence work and is embarking on a major buildout of data centres for OpenAI and other customers. Wall Street is watching the scale of spending on these ambitious projects and how quickly Oracle can complete them. The company said it added 850 megawatts of data centre capacity in the quarter.
The shares gained about 6 per cent in extended trading after closing at US$152.94 in New York. The stock had dropped 38 per cent since its Jun 1 high for the year on concerns over financing needs, rising component costs and news reports on data centre construction challenges, wrote Derrick Wood, an analyst at TD Cowen, ahead of the results.
Oracle reported US$28.5 billion in capital expenditures, mostly on data centre equipment, in the three months ended Aug 31. In a briefing with reporters, chief financial officer Hilary Maxson affirmed the company’s US$70 billion forecast for that spending in the year ending May 2027, with an additional US$20 billion to US$25 billion due to prepayments for some components.
The company said it booked more than US$30 billion of additional AI cloud contracts during the quarter, raising its remaining performance obligations, a measure of future revenue.
Fiscal first-quarter sales gained 30 per cent to US$19.3 billion. Profit, excluding some items, was US$1.92 per share. Analysts, on average estimated US$1.75 a share, according to data compiled by Bloomberg.
Sales of cloud applications increased 10 per cent to US$4.22 billion. Software revenue declined 3 per cent to US$5.55 billion, which Oracle said reflected the “continued migration” of customers from on-premises products to those on the cloud. BLOOMBERG
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