Shares of Oracle Corporation surged nearly 10% in premarket trading after the company issued a strong revenue forecast tied to growing demand for AI infrastructure.
Despite entering the cloud market later than rivals, Oracle has aggressively expanded AI-focused data centers, supplying high-end processors to clients such as Meta Platforms and OpenAI.
However, the rapid expansion has been debt-funded, increasing investor concerns about financial exposure if the technology market slows.
Earlier this year, Oracle said it could raise up to $50 billion in debt and equity to finance additional capacity for its expanding cloud and AI operations.
Analysts note many new AI contracts require upfront payments or customer hardware, allowing Oracle to expand revenue commitments without fully absorbing infrastructure costs.
A key indicator of future income, remaining performance obligations, surged 325% year-over-year to $553 billion in the company’s latest quarter.
Co-founder Larry Ellison said emerging AI coding tools will strengthen, not weaken, demand for Oracle software and could enable the creation of new products.
Oracle shares trade around 19.17 times forward earnings, slightly below Microsoft at roughly 22, as investors continue debating the risks of heavy AI investment.
