Oracle rallies as strong revenue forecast eases concerns over massive AI bets

NEW YORK, Mar 11 (Reuters): Oracle shares surged about 10 per cent before the bell on Wednesday after the software giant's upbeat revenue forecast eased concerns over its hefty spending on artificial intelligence infrastructure.

While Oracle was a latecomer to the cloud industry, it swiftly recognised the artificial intelligence boom, rapidly building out data centres filled with premium processors for customers such as Meta and OpenAI.

Still, the firm has borrowed heavily to fund the data centre build-outs, heavily exposing it to any potential downturn in the market. In February, the company said it planned to raise up to $50 billion in debt and equity to build capacity.

"We don't think the debates around financing are going away anytime soon. But importantly, many of the new AI contracts are structured so customers either pay upfront or bring their own hardware, which means Oracle can grow future revenue commitments without taking on the full cost itself," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Oracle's five-year credit default swaps , a gauge of how much investors charge to insure against the company's default, were at about 155 basis points early on Wednesday.