Oracle Stock Surges 40% Amid AI Cloud Demand and Historic $455 Billion Backlog

Wall Street doesn’t give out participation trophies, but if it did, Oracle would be grabbing an entire shelf today. The stock just recorded its largest single-day gain since 1992, with a 40% gain in a single trading day, which isn’t just rare, it’s quite extraordinary.

Oracle shares jumped 40% on Wednesday, which is its largest one-day increase since 1992, after the firm reported incredible cloud demand numbers. The rally has got Oracle to reach within the $1 trillion market cap threshold, as its valuation reached $950 billion. The boost reflects Oracle’s evolution into a leading player in the cloud and AI infrastructure domain.

Record-Breaking Demand & Backlog

At the center of the rally was the announcement by Oracle of $455 billion worth of remaining performance obligations (RPO), which is a contracted revenue backlog that represents a 359% year over year boost. The figure shocked analysts on Wall Street, who were expecting a much weaker number in the range of $180 billion.

Ben Reitzes, head of technology research at Melius Research said,

“This is a very historic kind of print right here from Oracle with this backlog. The Street was looking for about $180 billion in RPO and they’re talking about a number that is a multiple of that. That is astounding.”  

Cloud Growth Pathway

Oracle also revealed a stunning and ambitious vision for its cloud expansion that impressed and stunned Wall Street. It forecasts $18 billion in cloud infrastructure revenue in fiscal 2026, with hopes that this number will blow at a dramatically higher rate in the following years to $32 billion, $73 billion, $114 billion, and finally $144 billion. 

If Oracle is able to deliver, it would solidify the company as one of the industry’s leaders in the international cloud wars, set directly against Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. These estimates don’t merely point to expansion, they indicate Oracle’s desire to shift from a seeming legacy software behemoth to a new cloud giant that is competing at the forefront of the AI-fueled infrastructure bang.

Analyst Reactions

The forecast had analysts rushing to revise their expectations. D.A. Davidson’s Gil Luria referred to the update as “absolutely staggering”, while Wells Fargo analysts termed it a “momentous confirmation” of the AI trade. Several pointed out that Oracle’s cloud story dominated an otherwise softer earnings report.

In the quarter, Oracle reported adjusted earnings of $1.47 per share, which was only modestly below the analyst estimate of $1.48. Revenue was $14.93 billion, missing forecasts of $15.04 billion. However, the market ignored these misses due to the firm’s remarkable cloud growth.

Oracle’s Modification

Oracle’s results point to a larger pattern, where the legacy enterprise software companies are boldly shifting towards AI and cloud-based services. The firm’s cloud infrastructure is accelerating, which is driven by partnerships in AI workloads and high-performance computing capacity demand. 

Although some have raised doubts about whether Oracle can maintain such hyper-growth, as the size of its backlog and forward guidance indicate that the company has already won a large chunk of next-generation cloud computing demand.

Bottom Line

For decades, Oracle has been portrayed as a legacy tech player that has been clouded by newer cloud peers. But with a gigantic backlog, aggressive revenue road map, and investor optimism at an all-time high, Oracle is now one of the most intriguing AI and cloud tales. If Wednesday’s performance is any indication, Oracle’s ascent to $1 trillion might be less of a question of ‘if’ and more a question of ‘when’.

Oracle’s announcement of a $455 billion backlog has turned the tables. The AI wave is obviously redefining the tech industry, and Oracle’s investment in cloud infrastructure puts it more than a sidekick to AWS, Microsoft Azure, or Google Cloud. 

But history reveals that execution, and not forecasts, will determine if Oracle maintains this momentum. A 359% backlog increase is impressive, but executing on a multi-year roadmap anticipating tens of billions of revenue from the cloud will put to the test whether this legacy giant can really keep up with today’s world or not.

Investors must be reminded that markets have short attention spans and little mercy. The Street is investing in a vision of Oracle as an AI enabler at the center, but any execution cracks could rapidly pop this bubble. 

Nevertheless, if the company comes even slightly close to delivering what it’s promising, Oracle won’t be only entering the trillion-dollar club, rather it will redefine its own heritage as a winner of the AI-enabled cloud revolution.