Oracle’s cloud and AI business posted another blowout quarter as RPO soared 63% to $130 billion, demonstrating that while Oracle’s current cloud revenue is much smaller than that of the other three hyperscalers, its booming pipeline indicates it will close that gap aggressively in the next couple of years.
CEO Safra Catz said that 90% of that RPO, or $117 billion, is tied to cloud contracts.
If you’re wondering how quickly or how significantly those RPO numbers will convert to revenue, consider this:
- for Q3 ended Feb. 28, companywide revenue (not just cloud) grew 6% to $14.1 billion;
- for FY 2026 ending May 31, 2026, Catz said companywide revenue will rise to 15% on the strength of its cloud and AI business; and
- for FY2027 ending May 31, 2027, Catz said companywide revenue will rise to 20% because of the surging cloud and AI business.
Here’s a meaty example of the RPO explosion currently underway at Oracle: “Oracle signed sales contracts for more than $48 billion in Q3,” Catz said.
A few other key Q3 numbers:
Total cloud revenue was up 23% to $6.2 billion;
Cloud infrastructure revenue was up 49% to $2.7 billion;
Cloud application revenue was up 9% to $3.6 billion;
Within that total app number, Fusion Cloud ERP was up 16% to $900 million, and NetSuite Cloud ERP was also up 16% to $900 million.
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Meanwhile, to meet this booming demand, Oracle has been aggressively building out data center capacity but has been unable to keep up with customer demand. But chairman Larry Ellison said that by the end of this calendar year, Oracle will have doubled its total data-center capacity.
In addition, Ellison revealed a new product that will allow customers to more simply use AI models from leading providers in concert with Oracle Database 23ai for inferencing and training of their own private data.
“We are seeing enormous demand for AI inferencing on our customers’ private data,” Ellison said.
“So, we are connecting OpenAI ChatGPT, xAI Grok and Meta Llama directly to Version 23ai of the Oracle Database with advanced vector capabilities. This new product, called the Oracle AI Data Platform, makes it easy for customers to use any of the world’s leading AI models to analyze all of their private data —while keeping all their data private and secure.”
Final Thought
I’ll have more later this week from Catz and Ellison on the implications of this stunning growth, but for now a tip of the hat to Oracle for an extraordinary quarter.
