Oracle stock up on impressive cloud revenue

$Oracle(ORCL)$ jumped 14% after-hours following the announcement of mixed financial results and a quarterly cash dividend of 40 cents per share. This surge was propelled by substantial new cloud contracts and AI demand, with Oracle CEO Safra Catz highlighting a record 29% growth in total remaining performance obligations, exceeding $80 billion. ORCL also reported a whopping $12.3 billion in free cash flow for the past twelve . Oracle stock has now gained roughly 50% over the past twelve months.

 Oracle Q3 earnings snapshot

*Earned $2.4 billion versus the year-ago $1.89 billion

*Per-share earnings also climbed from 68 to 85 cents

*Adjusted EPS printed at $1.41 as per the earnings report

*Revenue jumped 7.0% year-over-year to $13.3 billion

*Consensus was $1.38 a share on $13.29 billion in revenue

Bernstein raised its price target on the stock to $159 from the previous $147, while maintaining an Outperform rating, primarily due to a notable achievement in its cloud and software segments.

The company has met revenue expectations and demonstrated a commendable improvement in operating margin. Oracle's forward-looking statements were particularly positive, providing solid revenue projections, including promising guidance for the fourth quarter, acceleration of growth for the fiscal year 2025, and reaffirmation of fiscal year 2026 targets.

These announcements have alleviated some growth concerns observed over the past two quarters, as evidenced by a 13% surge in the company's stock value after-hours trading.

Oracle's management highlighted the success of its OCI Gen 2 infrastructure business, which reported a 52% increase within the quarter and is expected to continue its hypergrowth phase for the foreseeable future. While CAPEX for the third quarter were slightly lower than anticipated at $1.6 billion compared to $1 billion in the second quarter.

Oracle plans to significantly increase CAPEX in the fourth quarter and aims for a $10 billion investment in CAPEX for FY25. This strategic financial planning is seen as a response to Oracle's concern about meeting the robust demand with sufficient supply.