Oracle’s Wall Street has been tumultuous over the last six months.
After its first quarter results, the stock soared by 36%, but then fell 12% after its second quarter, despite revenue exceeding expectations.
Oracle has a new argument to make now that the third quarter results were released on Tuesday.
Strong cloud growth is helping lift the mood.
Investors welcomed the news and shares rose up to 7% after hours.
Oracle Q3 Earnings: What’s most important?
Oracle’s Q3 fiscal year 2026 cloud revenue was $8.9 Billion, an increase of 44% over the previous year.
Analyst consensus was $8.85 Billion.
The total revenue increased by 22% over the previous year. This result indicates a strong growth trend, rather than simply meeting expectations.
Oracle’s cloud services growth of 44% must be understood by investors in order to put this number into context.
Database software was used to build the company, which companies run on their servers.
It has spent the last few years rebuilding its infrastructure as a provider of cloud computing services. This means it rents out computer power over the Internet to companies, in competition with Amazon Web Services (AWS), Microsoft Azure and Google Cloud.
This is a much bigger and more profitable market. Oracle now generates 52% of its total revenue from cloud services, up significantly from 43% a year earlier.
Oracle’s Remaining Performance Obligations, or contracted future revenues not yet realized, increased to $553 Billion in Q3 of FY2026 from $523 Billion in Q2 – a sharp increase from the previous year. This shows how much demand is already built into Oracle’s long-term cloud pipeline.
Debt is still a problem
Oracle has a story of strong growth, but there is an underlying complication.
Last quarter, the company surprised investors when it raised its forecast capital expenditure to around $50 billion for AI data centres.
Capital expenditures refer to the upfront investment a business makes in order to increase future capabilities. A $50 billion bet is an enormous wager on the future, which hasn’t yet arrived.
This announcement was accompanied by a better-than-expected Q2 earnings report. However, the December selloff still reached a record high of 12%.
Investors looked at the number of dollars spent and wondered if the return would be worth it.
The clean Q3 beat helps to ease the anxiety, but does not completely eliminate it.
Oracle’s massive debt-fuelled buildout is a real risk. Investors must also know that an impressive quarter does not equal a healthy balance sheet.
Oracle stock was trading at $149, which is well below the 200-day average, and about 50% lower than its peak in September.
This is just a beginning, and not the end of a long-term recovery.
As updates are made, this post Oracle’s Q3 earnings and the cloud are difficult to ignore.
