Oracle earnings beat and raised outlook fuel tech sector optimism, cloud revenue surges 121%

Oracle Corp. (NYSE: ORCL) delivered a stronger-than-expected fiscal first-quarter report late Thursday, beating consensus estimates on both earnings and revenue and raising its full-year adjusted profit guidance above Wall Street expectations. The results, driven by surging cloud infrastructure demand tied to artificial intelligence, sent shares higher in Friday trading and bolstered sentiment across the technology sector.

The enterprise software and cloud company reported adjusted earnings of $1.92 per share for the quarter ended August 31, topping the $1.74 consensus estimate by $0.18, according to MarketBeat. Revenue reached $19.34 billion, ahead of the $19.13 billion analyst forecast, and rose 29.6% from the same period a year earlier. On a non-GAAP basis, operating income increased 31% to $8.2 billion, with non-GAAP operating margin roughly flat year over year at 42%, the company said.

Chief Financial Officer Hilary Maxson described the quarter as one of acceleration, according to a transcript of the earnings call reported by MarketBeat. “If I had to describe this quarter in one word, I think it would be acceleration,” Maxson said, citing progress across cloud infrastructure, database services and applications.

Cloud infrastructure revenue surged 121% to about $7.4 billion, reinforcing investor perception that Oracle is benefiting from rising demand for AI computing capacity. The company’s remaining performance obligations (RPO) reached roughly $664 billion, providing significant future revenue visibility, MarketBeat reported. During the earnings call, management said RPO increased by $26 billion from the fourth quarter, with most new contracts structured as customer prepayments or bring-your-own-hardware arrangements that will not require incremental capital from Oracle.

**Guidance raised above consensus**

Oracle raised its full-year fiscal 2027 adjusted earnings-per-share guidance to $8.10, above the approximately $7.75 consensus estimate. For the second quarter, the company forecast adjusted EPS of $1.85 to $1.93, versus expectations near $1.82.

The company maintained its fiscal 2027 capital-expenditure outlook of $90 billion to $95 billion, indicating confidence that heavy investment in data centers will continue to support growth. Capital expenditures totaled $28 billion in the first quarter, resulting in negative free cash flow of $5 billion. Cash flow from operations reached a record $23 billion, aided by customer prepayments, according to Management.

Oracle also declared a quarterly dividend of $0.50 per share, payable October 23 to shareholders of record October 9, representing an annualized yield of about 1.3%, as reported by MarketBeat.

**AI capacity delivery accelerates**

Co-Chief Executive Officer Clay Magouyrk said Oracle delivered 850 megawatts of AI capacity during the quarter, including more than 300,000 graphics processing units. That delivery level was nearly three times the amount delivered during the preceding fourth quarter and represented 73% of the capacity delivered during the prior fiscal year, according to the transcript cited by MarketBeat.

GPU utilization stood at 97.9%, and capacity that came up for renewal was renewed or resold at prices 20% above prior contracts, Magouyrk said. At Oracle’s Abilene, Texas, facility, the company delivered 131,000 GPUs during the quarter. Six of eight campus buildings, representing 618 megawatts and 75% of the site’s total capacity, have been delivered to the customer.

Magouyrk said Oracle expects to deliver its first NVIDIA Vera Rubin systems to customers in the second quarter. Addressing questions about development sites in New Mexico and Wisconsin, he said neither location would affect fiscal 2027 revenue or earnings guidance. Construction in both states is on track as the company works through permit processes and power delivery, he said.

**Applications and AI agents gain traction**

Oracle’s SaaS business grew 10% year over year, with Fusion revenue up 14%. Oracle Health continued to accelerate, and industry applications grew more than 20%, according to Co-Chief Executive Officer Mike Sicilia, as reported by MarketBeat.

Customers used Oracle’s embedded AI capabilities more than 150 million times during the quarter, up 42% sequentially. AI agents executed more than 3.5 million times in production, nearly doubling from the prior quarter, while the number of customers with AI agents in production rose 90% to more than 2,300. Oracle plans to unveil an agentic AI accelerator at its AI World event in October.

The company announced general availability of NetSuite Next, an AI-powered agentic experience for NetSuite users. The NetSuite AI Connector Service, which connects NetSuite data with AI assistants including ChatGPT and Claude, has been adopted by more than 10,000 customers, according to the earnings call.

On the database side, Magouyrk said multicloud database revenue increased 353% year over year and multicloud customers grew 180%. Oracle completed its planned Azure and AWS footprint expansion.

**Sector sentiment shifts**

Multiple analysts responded with bullish ratings and increased price targets, contributing to a positive tone for tech stocks. Cantor Fitzgerald reaffirmed an "overweight" rating with a $284 price target, Stifel Nicolaus set a $200 target, and Wolfe Research reiterated an "outperform" rating with a $225 target, according to MarketBeat. UBS Group reissued a "buy" rating. BMO Capital Markets lowered its price target from $220 to $195 but retained an "outperform" rating.

The consensus analyst rating on Oracle is "Moderate Buy" with an average price target of $255.92, MarketBeat reported.

Trading volume on Friday reached approximately 22.5 million shares, a 22% decline from the prior session’s 28.8 million shares. The stock last traded at $156.16, up from Thursday’s close of $152.94, according to MarketBeat.

In a separate disclosure, Oracle Vice Chairman Jeffrey Henley sold 400,000 shares of company stock at an average price of $159.16 under a pre-arranged 10b5-1 trading plan, reducing his stake by 50%. The transaction was disclosed in a filing with the Securities and Exchange Commission.