Oracle stock rises 8% as AI push lifts revenue

Oracle said its push into AI data centers will lift revenue through 2027 and raised its fiscal 2027 revenue forecast to US$90 billion, topping analysts’ US$86.6 billion and sending shares up about 8% after-hours.

Remaining Performance Obligations (RPO), a key contracted revenue metric, rose 325% year-on-year to US$553 billion in Q3, above estimates.

Oracle said most of the RPO increase is from large AI contracts and that it does not expect to need extra funding despite heavy borrowing.

Clay Magouyrk, co-CEO, said cloud margins should improve and that renting AI chips from partners such as Nvidia could yield 30% to 40% margins while other services may account for 10% to 20% of cloud spending.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Oracle’s record backlog is fueling credit-market hedging

Oracle’s contracted revenue backlog jumped, yet its debt-funded buildout of AI data centers has turned the company into a common hedge for an AI slowdown in credit markets (markets for trading and insuring corporate debt) 1.
Traders have piled into Oracle’s credit default swaps (CDS, contracts that function like insurance against a borrower defaulting) to position for a cooling AI cycle. The price to insure its debt has climbed fast since Oracle announced a US$300 billion OpenAI deal in September 2025 1.
Heavy borrowing sits behind the caution. Oracle’s debt-to-equity ratio (a measure of how much debt a company uses relative to shareholder equity) stands near 500% 2.
Barclays cut Oracle’s debt to underweight and warned a slide to BBB-, the lowest investment-grade rating before junk status 3. Oracle shares gave back about one-third of the September 2025 rally as worries about leverage grew 3.

The AI boom is forcing a split in big tech’s financing strategy

Oracle’s outlays fit a wider AI infrastructure race. Hyperscalers (the largest cloud companies that run vast data center networks) sold US$121 billion in bonds in 2025 to pay for capital expenditures 2.
Big tech firms have started to spread risk through different funding playbooks.
Oracle has placed more of the spending on its corporate balance sheet, which has drawn closer attention from credit markets 2.
Rivals have leaned on off-balance-sheet structures (arrangements kept outside the main financial statements). Examples include Microsoft’s infrastructure partnership with BlackRock and Meta’s data center joint venture with Blue Owl, which fund growth without adding the same level of corporate leverage 2.