Oracle successfully calmed Wall Street's jitters on Tuesday. The cloud services and software company, which has become a focal point for investor anxiety regarding AI-related spending, reported February quarter revenue that slightly exceeded market expectations. More importantly, this marks the second time in two quarters that the company has raised its revenue forecast for the next fiscal year beginning in June.

Oracle now anticipates fiscal year 2027 revenue growth of 34%, more than double the growth rate expected for this year and four times the average revenue growth rate since 2021. Its battered stock price rose 9% in pre-market trading.

The core of investor concern over the past six months, which has halved the stock price, stems from Oracle borrowing hundreds of billions of dollars to build data centers for clients like OpenAI, whose ability to pay in the coming years is heavily dependent on subsequent financing rounds.

Oracle sought to reassure investors that all is well, noting that "some of its largest AI cloud computing customers have recently significantly strengthened their financial positions," a reference to OpenAI's recently announced $110 billion funding round. However, OpenAI will not receive the entire sum at once. SoftBank, one of the investors in this round, is itself raising debt to fund its investment in OpenAI. This AI infrastructure expansion is essentially a chain of financing.

Oracle executives also emphasized on an analyst call that the company has reduced the need for external financing for future data center projects by having customers prepay or supply their own AI chips. However, executives did not clarify the impact such agreements would have on revenue, as payments are unlikely to match the original model if customers provide their own chips or pay in advance.

Oracle has also not specified how this shift in partnership models will affect overall data center capital expenditures. The company currently expects total capital expenditures for the full 2026 fiscal year ending in May to reach $50 billion, more than double the previous fiscal year.

Data from S&P Global Market Intelligence shows analysts expect Oracle's free cash flow burn to reach $23 billion this fiscal year. For comparison, Oracle generated a total of only $25 billion in cumulative cash flow over the three years from 2022 to 2024. When asked about capital expenditure expectations for fiscal 2027, executives did not provide a clear answer. While investors may feel temporarily reassured by these results, risks remain.

Salesforce is making a bold move. On the same day Amazon entered the bond market to raise up to $50 billion for AI data center expansion, reports indicated that Salesforce plans to issue $20 to $25 billion in bonds to fund a $50 billion stock buyback program.

This represents a significant amount of debt for Salesforce. As of January 31, the company had only $14 billion in outstanding debt and a net cash position of $9.5 billion.

This move was foreshadowed. CEO Marc Benioff hinted during the last earnings call that Salesforce was "not leveraging debt effectively." He discussed the company's stock price, which has fallen 26% year-to-date, and the fact that the company has issued shares for major acquisitions in recent years.

"Now is the opportunity to buy back some of that stock... I think debt is a great way to do that," he said.

At the current stock price, $50 billion could repurchase 250 million shares, reducing the share count by approximately one-quarter to 673 million shares, the lowest level in nearly a decade.

However, rating agencies are not optimistic. Moody's, for example, downgraded the company's rating from A1 to A2, citing a "significant shift in financial policy, including increased tolerance for debt."

Meanwhile, Salesforce's stock fell about 2% to around $195, in line with its trading range over the past month. While such a large buyback is intended to boost the share price, it does not appear to have impressed equity investors.

In other news: Nvidia and Thinking Machines Lab, a model company co-founded by former OpenAI CTO Mira Murati, announced a strategic partnership on Tuesday to deploy at least 1 gigawatt of servers powered by Nvidia's upcoming Vera Rubin chips. Nvidia also made a "significant investment" in the company.

Google announced on Tuesday that it will provide its Gemini Agent Designer to the U.S. Department of Defense for unclassified projects.

Former Meta Chief AI Scientist Yann LeCun raised over $1 billion for his new AI startup, Advanced Machine Intelligence Labs. Investors include Nvidia, Greycroft, former Google CEO Eric Schmidt, and Jeff Bezos.

Meta hired Matt Schlicht and Ben Parr, founders of the AI agent social network Moltbook, and acquired Moltbook. Both will join Meta's Superintelligence Lab.

A judge ordered Perplexity to temporarily cease accessing Amazon's website, a victory for Amazon in its lawsuit against the AI search startup. Amazon sued in November, alleging Perplexity fraudulently accessed the site and placed orders on behalf of users through its AI browser, Comet.