Oracle’s outlook for its AI data centers improved on Tuesday after the company informed investors that the ongoing AI surge will drive revenue growth through 2027. Oracle expects the boom to continue for at least another year, which boosted its shares by over 8% in after-hours U.S. trading. The forecast reflects increasing demand for AI computing power as more North American companies adopt Oracle’s cloud and data solutions.
Oracle reports that its accelerated investment in high-capacity facilities for AI partners is delivering results. After investing billions to expand its cloud AI infrastructure, the company now projects $90 billion in revenue for fiscal 2027, surpassing Wall Street expectations and indicating robust growth in its cloud division. Previous concerns about the pace of returns on AI spending have eased in light of these new targets.
Oracle also reported a significant increase in remaining performance obligations, a key indicator of future contracted revenue. RPO rose 325% year-over-year to $553 billion in the third quarter, exceeding analyst expectations and demonstrating that large AI contracts are now central to Oracle’s long-term pipeline. The company stated it does not anticipate raising additional funds to support these commitments, despite recent borrowing to expand its AI data centers.
The U.S. market remains a key driver for Oracle. Many of its largest AI deals involve American companies migrating workloads to cloud platforms. Demand has grown as organizations such as OpenAI and Meta have selected Oracle for high-performance systems supporting large-scale model training. This trend has reinforced Oracle’s position as a leading provider of AI computing infrastructure.
During an investor call, Oracle CEO Clay Magouyrk stated that the company expects cloud margins to increase over time. He explained that renting AI chips from partners such as Nvidia should result in margins of 30% to 40%. He also noted that 10% to 20% of customer spending will support other Oracle services, including the database business, which maintains margins between 60% and 80%. As more clients adopt Oracle systems for advanced AI workloads, these factors could further improve cloud margins.
Chairman Larry Ellison highlighted new generative AI software tools, informing investors that Oracle will use smaller engineering teams and AI coding tools to accelerate solution development. These advancements will expand Oracle’s SaaS AI offerings, enabling businesses to automate operations in sectors such as healthcare and financial services. Ellison noted that AI coding tools may challenge some software providers but expressed confidence in Oracle’s early adoption of these technologies.
The company also reiterated its commitment to expanding Oracle generative AI services. Oracle aims for its AI data centers to manage substantial AI traffic while supporting its broader cloud platform. Its expanding partnership with OpenAI aligns with this strategy, providing both companies greater flexibility to scale as AI workloads increase across the U.S. Oracle posted third‑quarter revenue of $17.19 billion, slightly above analyst expectations. For the current quarter, the company expects adjusted earnings between $1.96 and $2.00 per share. Oracle also predicted revenue growth between 19% and 21%, along with cloud revenue growth of up to 50%.
This strong performance highlights the payoff from Oracle’s big investment in AI data centers. The company has been racing to compete with Amazon’s AWS and Microsoft Azure, which dominate the U.S. cloud landscape. Oracle believes its AI‑focused facilities give it an edge in a market where companies now demand faster, more reliable computing for training and deploying AI models.
The company’s move toward AI workloads highlights the rapid evolution of the global cloud industry. Oracle now supports some of the world’s largest AI systems, relying on the accelerated adoption of cloud-based AI tools. With rising stock and an improving outlook, Oracle enters next year with strong momentum. The company expects the AI boom to continue through 2027, with its growing network of AI data centers positioned to play a central role.
