Oracle’s stock jumped in extended trading after the company reported quarterly earnings and revenue that beat analyst expectations. The impressive results were significantly boosted by a more than doubling of its cloud infrastructure revenue, underscoring Oracle’s push to capitalize on the AI boom.
The company also announced over $30 billion in new AI contracts and provided an optimistic fiscal 2027 outlook, despite ongoing investments in data center expansion and a substantial debt load.
Oracle's (ORCL) stock experienced a significant surge in after-hours trading, climbing 4% on Thursday, following the software giant's announcement of robust quarterly results that surpassed analyst expectations. The company's impressive performance was largely driven by a more than doubling of its cloud infrastructure revenue, signaling a powerful stride in its ambition to capture a larger share of the burgeoning artificial intelligence market.
The logo of Oracle at its German headquarters. (Sven Hoppe | Picture Alliance | Getty Images)
Oracle's financial report for the fiscal first quarter, ending August 31, revealed adjusted earnings per share of $1.92, exceeding the LSEG consensus estimate of $1.74. Revenue for the quarter reached $19.35 billion, also topping the $19.14 billion consensus. This translates to a year-over-year revenue growth of nearly 30%, with the company projecting an acceleration to between 30% and 34% for the fiscal second quarter.
The company's strategic investments in data center expansion, crucial for its AI ambitions, are yielding significant returns. Cloud revenue surged by an impressive 62% year-over-year, hitting $11.61 billion, and notably, revenue from cloud infrastructure more than doubled to $7.4 billion, surpassing analyst expectations of $7.09 billion.
Despite these strong results, Oracle continues to navigate challenges related to its substantial debt, now at $125 billion, and a negative free cash flow of $5.4 billion in the quarter, a significant increase from $362 million a year prior. Capital expenditures also saw a dramatic rise, soaring to $28.50 billion from $8.50 billion, reflecting the aggressive build-out of 850 megawatts of data center capacity during the quarter.
Looking ahead, Oracle provided an optimistic outlook for fiscal year 2027, forecasting adjusted earnings per share of $8.10 on revenue of at least $90 billion, slightly ahead of LSEG consensus estimates. Management addressed concerns about data center development, particularly a report about a delayed natural gas pipeline for a New Mexico data center, assuring investors that current schedules remain on track and do not impact the fiscal '27 outlook.
Further bolstering its position in the AI landscape, Oracle announced over $30 billion in additional AI contracts in the first quarter without requiring further capital investment. The company also highlighted recent wins, including AI agents for human resources teams and a significant 10-year Pentagon contract potentially worth up to $7 billion.
The software category, however, saw a slight decline of about 3%, generating $5.55 billion in revenue, below the $5.61 billion consensus. Yet, Oracle's remaining performance obligations stood strong at $664 billion, exceeding the $630.6 billion consensus, indicating a robust pipeline of future revenue.
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