Oracle Corporation shares surged after it reported a 27% increase in net income for the third quarter of the 2026 financial year (Q3 FY26) and forecast continued growth in revenue.
The technology giant said net income was US$3.71 billion (A$5.2 billion) in the three months ended 28 February 2026 compared with $2.936 billion in the previous corresponding period.
The company, best known for its database software but increasingly moving into cloud computing, said diluted earnings per share (EPS) climbed 25% to $1.27 on revenue which grew 22% to $17.19 billion.
Oracle said Q3 FY26 was an “exceptional quarter” with results that exceeded expectations and the first third quarter in more than 15 years where organic revenue and non-GAAP EPS grew at 20% or more.
It said revenue from its Cloud infrastructure business, where it competes with companies including Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG) and Microsoft (NASDAQ), was at the high end of its guidance.
Remaining Performance Obligations (RPO), representing contracted revenue which is not yet earned, surged 325% to $553 billion at the end of the quarter.
Most of the increase was related to large-scale artificial intelligence (AI) contracts, which it did not expect would need incremental funds to be raised for support.
The company said it expected revenue to grow between 18% and 20%, helped by a Cloud revenue increase of 44% to 48%, and non-GAAP EPS to rise by between 15% and 17% to $1.96-$2.00, all in Q4.
The Q4 EPS forecast beat analysts' estimates of $1.94.
It maintained its revenue guidance of $67 billion for FY26 but lifted its guidance for FY27 to $90 billion.
The results help to allay investor concerns that Oracle's costly multi-billion dollar push into AI computing would not generate profits quickly enough, according to Reuters.
Oracle (NYSE: ORCL) shares had closed $2.15 (1.42%) lower at $149.40 on Tuesday (Wednesday AEDT), capitalising the company at $429.25 billion, but after the announcement, they surged 9.7% to $163.93 in after-hours trading.
"Oracle's quarter is a beat and a stress test result for the AI trade," eMarketer analyst Jacob Bourne was quoted in a Reuters story as saying.
"As the most debt-exposed major player in AI infrastructure, Oracle is the canary in the coal mine and this report suggests there’s underlying health in AI spending beyond the hype."
