"Oracle's Q2 FY2026 report in December was a study in contradictions. EPS came in at $2.26 against an estimate of $1.63, a massive beat. But shares plunged roughly 12% after management unveiled an aggressive capital spending plan that rattled investors focused on near-term profitability. The EPS beat was partly inflated by a one-time $2.70 billion Ampere divestiture gain."
"Cloud infrastructure revenue grew 68% year over year, and the remaining performance obligation hit $523 billion, up 438% year over year. The backlog is enormous. The question is how much Wall Street fears continuing concentration to OpenAI. Oracle may be the canary in the coal mine for AI infrastructure deals, making tonight's commentary on deal flow and cloud demand especially important for the broader sector."
"IaaS revenue growth rate: Last quarter it hit $4.079 billion, up 68% year over year. Analysts want to see that momentum hold or accelerate. A deceleration here would be the single biggest negative signal."
Oracle reports fiscal Q3 2026 results with the stock trading at $151.12, down significantly from its 52-week high of $344.21. Wall Street expects EPS of $1.69 and revenue of $16.9 billion. The forward P/E stands at 19x with an average analyst price target of $253.08, suggesting substantial upside potential. Prediction markets assign a 78% probability to an earnings beat. Last quarter delivered a massive EPS beat of $2.26 versus $1.63 estimate, though shares fell 12% due to aggressive capital spending plans. Cloud infrastructure revenue grew 68% year-over-year with a $523 billion remaining performance obligation, up 438% year-over-year. Key focus areas include IaaS revenue growth sustainability and RPO conversion rates.
#oracle-earnings #cloud-infrastructure-growth #ai-infrastructure-deals #capital-spending #remaining-performance-obligation
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