Shares of software and cloud infrastructure specialist Oracle (NYSE: ORCL) have taken a severe beating recently. Over the last six months, the stock has plummeted, falling more than 50% as of this writing.
The tech stock’s decline comes as investors fret over the company’s staggering capital expenditure plans and the debt required to fund its aggressive artificial intelligence (AI) data center build-out.
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But it’s not like the underlying business is struggling. In fact, Oracle just reported another quarter of accelerating top-line growth and surging profits.
So, with the underlying business seeing accelerating growth and a soaring backlog even as its stock gets hammered, is this a buying opportunity?
Imag source: Getty Images.
Oracle’s fiscal third-quarter results highlighted a business that is firing on all cylinders. The company’s total revenue was $17.2 billion — up 22% year over year. This marked a meaningful acceleration from 14% year-over-year growth in fiscal Q2.
And this growth was highly profitable. Oracle’s earnings per share rose 21% year over year to $1.79.
The quarter’s strength was largely driven by the company’s cloud operations. Cloud infrastructure revenue was $4.9 billion, up 84% year over year. This represents a rapid acceleration from 68% growth in the prior quarter.
Even more encouraging than the quarter’s strong financial performance is the massive pipeline of future business Oracle has secured. The company’s remaining performance obligations (RPO), or contractually obligated revenue that hasn’t yet been recognized, skyrocketed to a staggering $553 billion — up 325% year over year.
This uncanny backlog is the result of large-scale AI contracts. In addition, many of the contracts behind this swollen backlog are structured so that customers prepay for equipment or supply their own…
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