Oracle shares rise as AI cloud backlog beats estimates

Oracle shares rose 5.5% premarket on Friday after the cloud computing and software company's stronger-than-expected quarterly results eased concerns around its massive debt-driven spending spree.

The Austin, Texas-based firm booked more than $30 billion of additional AI cloud contracts in the first fiscal ‌quarter, boosting ⁠its ⁠revenue backlog to $664 billion, above analyst estimates of $639.89 billion, according to data from Visible Alpha.

Oracle's upbeat results follow a period of underperformance, ​as the company races to keep pace with hyperscale rivals, with mounting debt and squeezed cash flows raising doubts ​over when its massive AI spending ⁠will pay ‌off.


The results should address key investor ​concerns including ​whether Oracle's backlog growth can be sustained, ⁠its conversion into revenue amid data center delays, ​and the need for further capital raises, ​J.P. Morgan analysts said.

Its shares were down more than 21% so far this year, compared with a nearly 11% rise in the benchmark S&P 500 index.

"Oracle's problem has not been finding customers, but proving that its ‌enormous data centre build-out can eventually generate enough cash to justify the cost. The results ​should nevertheless ​ease fears that ⁠Oracle is building ahead of demand," said Lale Akoner, etoro market strategist.

Oracle is set to add about $24 billion in market value at the current share price of $161.3, if gains hold.

The stock trades at 16.86 times its forward earnings estimates, compared with Microsoft's 23.84 multiple and Amazon's 22.58, according to data compiled by LSEG.