Oracle’s $60B Project at 35% Margin Debunks “AI Doesn’t Make Money”

TradingKey - Oracle, which has been part of the “AI inner circle” for over a month, has long faced market skepticism over its sky-high RPO (remaining performance obligation) orders — criticized as “all hype and no profit.” However, on Thursday, the company revealed a $60 billion AI infrastructure project with a 35% gross margin, easing such concerns and boosting Oracle’s stock, which rose 3% despite broader market declines.

At its annual conference in Las Vegas on October 16, Oracle presented a case: an infrastructure project designed for AI workloads will generate $60 billion in revenue for the company over six years, with a gross margin of 35%. 

This figure far exceeds market rumors suggesting Oracle’s AI cloud business had a mere 14% profit margin.

Additionally, Oracle projected that by fiscal year 2030, its revenue would reach $225 billion, surpassing the expected $198 billion; earnings per share are forecast at $21, above the anticipated $18.50.

The news sent Oracle’s stock up as much as 6% intraday on Thursday, closing 3% higher, while the S&P 500 and Nasdaq Composite fell due to rising bad debt risks among U.S. regional banks.

Oracle disclosed stunning results in early September for its latest fiscal quarter, with RPO surging 359% to $455 billion. Yet, concerns persisted: overreliance on customer OpenAI, negative free cash flow expected for several more years, and institutions like Morgan Stanley forecasting sharply declining margins — branding Oracle as “orders booming, but profits worrying.”

Anurag Rana, analyst at Bloomberg, noted that the latest update helps calm fears about deteriorating profitability. Given that this business is still in its early stages, profits are likely to improve over the coming years.