Oracle said Tuesday that the ongoing boom in AI data centers is expected to drive its revenue beyond Wall Street forecasts through at least 2027, sending the company’s shares up about 8.3 percent in extended trading. The results helped ease investor worries that Oracle’s multi-billion dollar investment in AI infrastructure might take too long to become profitable. The company has shifted heavily toward building data centers for partners such as OpenAI and Meta Platforms. At the same time, Oracle has reduced staff and is relying on smaller engineering teams and AI coding tools to develop new software for its long-standing enterprise customers.

A key measure of future revenue, remaining performance obligations, jumped 325 percent year over year to 553 billion dollars in the third quarter, surpassing analysts’ estimate of about 540 billion. This figure was also higher than the 523 billion reported in the previous quarter. Oracle said much of the increase came from large AI contracts, noting that despite heavy borrowing it does not expect to raise additional funds for these projects. The company also lifted its revenue outlook for fiscal 2027 to 90 billion dollars, exceeding analysts’ expectations of roughly 86.6 billion.

According to analyst Jacob Bourne of eMarketer, Oracle’s performance is both a strong quarter and an important test for the broader AI investment trend. Because Oracle carries significant debt compared with other AI infrastructure firms, its results suggest that demand for AI spending remains solid. During a call with investors, CEO Clay Magouyrk said margins in the company’s cloud business should improve over time. He reiterated that renting AI chips from partners such as Nvidia is expected to generate margins of around 30 to 40 percent.

He also noted that about 10 to 20 percent of customer spending on Oracle’s cloud platform goes toward other services, including its database products, which carry gross margins of 60 to 80 percent. Together, these factors are expected to strengthen the profitability of Oracle Cloud Infrastructure. Oracle’s push to expand its data center network is helping it capture a portion of the rapidly growing AI market. The company has been investing heavily in cloud infrastructure to support generative AI workloads while competing with major providers such as Amazon Web Services and Microsoft Azure.

On the same call, Oracle co-founder and executive chairman Larry Ellison said concerns that AI coding tools could reduce demand for enterprise software do not apply to Oracle. He explained that the company is adopting these tools to help small engineering teams develop new software-as-a-service products more efficiently.

For the third quarter ending February 28, Oracle reported revenue of 17.19 billion dollars, beating analysts’ estimate of 16.91 billion. The company expects adjusted earnings in the current fourth quarter to range between 1.96 and 2.00 dollars per share, above the projected 1.94 dollars. Oracle also forecast fourth-quarter revenue growth of 19 to 21 percent and cloud revenue growth of 46 to 50 percent, broadly matching analysts’ expectations.