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Oracle’s shares climbed as much as 10 per cent on Tuesday after it posted better than expected earnings and revenue guidance as it tried to reassure investors about its big bet on AI data centres.

The database group founded by Larry Ellison beat Wall Street expectations with $17.2bn in revenues in its fiscal third quarter, up 22 per cent from a year ago, and a forecast of $90bn for sales in its next fiscal year.

Oracle credited strong “demand for cloud computing for AI training and inferencing” with helping it “comfortably meet and likely exceed our revenue growth rate forecast for [2027] and beyond”.

The Austin-based group has been under intense pressure from investors over its aggressive push to compete with larger rivals such as Amazon and Microsoft to supply computing power to AI companies.

The shift has required a big increase in borrowing to fund costly data centre construction and has left Oracle heavily reliant on OpenAI as a customer — after the pair signed a huge deal last year.

The stock is down more than 50 per cent from its peak in the autumn, but rallied in after-hours trading.

Clay Magouyrk, co-CEO, told investors that the strong forecast for 2027 showed that Oracle’s sharp pivot from selling business software into leasing data centres was bearing fruit.

“This [has been] made possible by Oracle’s transition from a traditionally seasonal, licence-based business into a highly predictable, recurring revenue cloud,” Magouyrk said.

Cloud revenue came in above expectations at about $8.9bn in the quarter.

Line chart of Share price, $ showing Oracle stock has dropped more than 50% from its peak

Oracle on Tuesday tried to rebut some key investor concerns about its AI strategy. Its $300bn deal with OpenAI has left the bulk of Oracle’s future business dependent on the lossmaking start-up’s ability to meet its financial commitments.

Oracle said some of the biggest AI data centre customers had “recently strengthened their financial positions quite substantially”, without naming OpenAI, which recently closed a record $110bn funding deal.

Magouyrk also told investors that 90 per cent of the data centre capacity it needed to deliver for customers in the next three years was now fully funded.

Oracle has no plans to raise additional debt this fiscal year, after selling $25bn in bonds in February. It still plans to raise billions more in equity.

It said customers had made payments upfront or were purchasing expensive GPUs to fill the group’s data centres themselves.

Oracle’s long-term debt, including operating leases, rose to $143bn while its capital expenditures in the quarter increased more than 50 per cent to $18.6bn — more than analysts’ estimates compiled by Visible Alpha.

Oracle stuck with a forecast of $50bn in capex for the current fiscal year. Its stock dropped 10 per cent after it unveiled this higher guidance three months ago.

Total bookings for future revenue, known as remaining performance obligations, increased to $553bn in the three months to the end of February, while net income was broadly in line with expectations at $3.7bn.

Oracle also said it had been “restructuring” its software engineering teams because AI coding tools would allow them to “build more software in less time with fewer people”.

Analysts expect the group to cut jobs and sell some of its business units to support its AI investment push. Oracle has drawn down roughly $961mn from a $1.6bn pot it set aside at the start of the fiscal year to help fund payments to employees whose jobs are cut.

Oracle has n recent months insisted that the vast projects it has committed to build are on track despite concerns that some sites are slipping behind schedule because of financing and regulatory hurdles.

The FT in December reported a crucial financial partner would not back a site in Michigan. The state’s attorney-general has also moved to have regulators revisit that site’s power plans.

Oracle’s shares were hit by reports last week that OpenAI would not take up an option to expand its contract at a data-centre campus in Abilene, Texas.

The company has insisted its projects remain on track. Oracle last month raised $25bn through a blockbuster bond offering to help finance various data centres.