Investing.com - Shares in Oracle (NYSE:ORCL) edged lower in premarket U.S. trading on Tuesday after the software group reported fiscal third-quarter results that fell short of Wall Street estimates, even as its order book surged thanks to record demand.
For the three months ended February 28, Oracle reported adjusted earnings per share (EPS) of $1.47 on revenue of $14.13 billion, missing analysts' expectations of $1.49 and $14.39 billion, respectively.
However, the firm unveiled an uptick in bookings that far outstripped projections, with Chairman Larry Ellison pointing to “record levels” of customer demand. Remaining performance obligations (RPO), a gauge of booked revenue, climbed by 62% to $130 billion.
"We are on schedule to double our data center capacity this calendar year," Ellison added.
Analysts also noted that the bookings spike did not include any benefits from Oracle’s “Stargate” joint venture with ChatGPT-maker OpenAI and Japan's SoftBank (TYO:9984) to build out U.S. artificial intelligence infrastructure.
Executives at the firm said they now expect revenue to grow by 15% in its 2026 fiscal year and by 20% in fiscal 2027, both surpassing estimates. The outlook from CEO Safra Catz was interpreted as a sign that there has been no slowdown in demand for Oracle’s AI-enhanced cloud computing services.
Catz told analysts that Oracle plans to more than double its capital expenditures to $16 billion during the 2025 fiscal year to help meet demand that is "dramatically" outpacing supply. However, analysts flagged lingering worries over the eventual financial returns and cost effectiveness of the soaring spending on AI.
The firm also raised its quarterly dividend by 25% to $0.50 per share, or $2.00 annually, up from $1.60.
"[There is] [g]oing to be some back/forth with bulls/bears as Oracle came in a bit shy on revenue/EPS versus consensus, but the big story was the massive jump in RPO to $130 billion," Evercore ISI Kirk Materne said in a note to clients.
(Yasin Ebrahim and Frank DeMatteo contributed to this report)
