Oracle Says AI Coding Tools Let Smaller Teams Build More Software as Cloud Revenue Jumps 44%

Oracle reported a revenue of $17.2 billion for the third quarter of fiscal year 2026, up 22% year-over-year, driven largely by continued growth in cloud infrastructure and AI-related workloads.

The company reported cloud revenue of $8.9 billion, up 44%, and cloud infrastructure (IaaS) revenue of $4.9 billion, up 84%. Oracle’s cloud applications (SaaS) revenue totalled $4.0 billion, up 13% year-over-year.

For the quarter, the Generally Accepted Accounting Principles (GAAP) net income was $3.7 billion, while non-GAAP net income reached $5.2 billion, up 23% year-over-year in USD.

GAAP earnings per share were $1.27, up 24%, and non-GAAP EPS rose to $1.79, up 21%.

Demand for AI infrastructure and database services continued to accelerate. Multicloud database revenue grew 531% year-over-year, while AI infrastructure revenue rose 243%, with demand exceeding supply.

As a part of its multi-cloud strategy, Oracle has expanded its database services across partner clouds, including Microsoft, Google and Amazon, allowing customers to run Oracle databases across multiple cloud platforms. The company said it now has global region coverage across partner clouds, with dozens of regions live.

Oracle said remaining performance obligations—a measure of contracted but unrecognised revenue—reached $553 billion, up 325% year-over-year and $29 billion from the previous quarter.

The increase was driven largely by large-scale AI infrastructure contracts, some of which involve customers prepaying for hardware or supplying their own GPUs.

The company said it has also signed more than $29 billion in new contracts under new financing models, including bring-your-own-hardware arrangements and upfront customer payments.

Oracle has secured large contracts to provide cloud infrastructure to AI companies, including OpenAI, but it has less cash available than larger rivals such as Amazon and Microsoft.

To support the expansion of infrastructure demand, Oracle said it plans to raise up to $50 billion in debt and equity financing. The company has already raised $30 billion through investment-grade bonds and mandatory convertible preferred stock, with investor demand exceeding the amount offered.

Oracle plans to bring more than 10 gigawatts of computing capacity online over the next three years, co-CEO Clay Magouyrk said on the earnings call.

“​​Those infrastructure investments also need funding, and greater than 90% of that capacity is fully funded through our partners, with the remainder planned to finish this month,” he added.

Oracle said two buildings at its Abilene, Texas, data centre project for OpenAI are already operational and the campus remains on track, rejecting a Bloomberg report that expansion plans had been dropped.

Oracle said improvements in AI models that generate computer code are allowing the company to restructure its product development teams into smaller and more agile groups.

“This new AI code generation technology is enabling us to build more software in less time with fewer people. Oracle is now building more SaaS applications for more industries at a lower cost. AI code generation is making our SaaS application suites more competitive and more profitable,” the company said. 

The company is reportedly also planning to lay off thousands of employees.

Larry Ellison, Oracle’s Chairman and Chief Technology Officer, pushed back on predictions of a SaaSpocalypse, arguing that AI coding tools are strengthening Oracle’s ability to build software across entire industries.

“Thank God we have these coding tools now that allow us to build a comprehensive set of software—agent-based software—to automate an ecosystem like health care or financial services. That is what we are doing at Oracle Corporation. That is why we think we are a disruptor. That is why we think the SaaS apocalypse applies to others, but not to us,” he said during the earnings call. 

For the fourth quarter of fiscal 2026, Oracle expects revenue to grow between 19% and 21% and cloud revenue to increase between 46% and 50%. Non-GAAP earnings per share are expected to be between $1.96 and $2.00.

The company maintained its fiscal 2026 revenue forecast of $67 billion and capital expenditures of $50 billion. It also raised its fiscal 2027 revenue outlook to $90 billion, citing continued growth in AI training and inference workloads.