Oracle Beats Q1 Estimates, Raises Full-Year Guidance as AI Cloud Revenue Surges 121%

Oracle Corp. (NYSE: ORCL) on Thursday reported fiscal first-quarter results that topped Wall Street estimates, driven by a surge in AI cloud demand, and lifted its full-year earnings guidance. The enterprise software company posted adjusted earnings per share of $1.92, beating the consensus estimate of $1.74 by $0.18. Revenue came in at $19.34 billion, above the $19.13 billion analysts had forecast and up 29.6% from a year earlier.

Shares of Oracle changed hands at $156.16 in trading on Friday, up from the previous close of $152.94. Volume reached approximately 22.5 million shares, a 22% decline from the prior session’s 28.8 million shares.

Cloud infrastructure revenue surged 121% to about $7.4 billion, according to the company’s earnings report. Cloud applications revenue rose 10% year over year. Total first-quarter revenue of $19.3 billion marked a 30% increase in U.S. dollars, with Oracle noting it was the first time the company posted sequential revenue growth from the fiscal fourth quarter to the first quarter.

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

Non-GAAP operating income rose 31% to $8.2 billion, while non-GAAP earnings per share climbed 30% to $1.92. The non-GAAP operating margin held roughly flat year over year at 42%. Maxson said gross margin declined as expected because data-center ramp-up and a larger mix of infrastructure revenue weighed on the metric, but operating leverage from efficiency actions offset the impact.

Remaining performance obligations (RPO) reached roughly $664 billion, providing substantial future revenue visibility, according to the company’s earnings materials. On the call, Maxson said RPO increased by $26 billion from the prior quarter, with most new contracts structured with customer prepayments or bring-your-own-hardware arrangements that will not require incremental capital from Oracle. The company now expects about half of its RPO to convert to sales over the next 36 months.

Guidance Raised, Capex Plans Maintained

Oracle raised its outlook for the full fiscal year. The company forecast fiscal 2027 adjusted earnings per share of $8.10, compared with the consensus estimate near $7.75. For the fiscal second quarter, Oracle guided for EPS of $1.85 to $1.93, above the roughly $1.82 analysts had projected. The company also said it raised its full-year revenue and non-GAAP earnings outlook, though specific revenue guidance was not detailed in the available reports.

Oracle maintained its fiscal 2027 capital-expenditure plan of $90 billion to $95 billion, signaling confidence that heavy investment in data centers will continue to support cloud growth. Net cash capital expenditures, after customer prepayments, are expected not to exceed $70 billion. During the first quarter, capital expenditures totaled $28 billion, resulting in negative free cash flow of $5 billion. Maxson did not provide a specific timetable for returning to positive free cash flow but noted that projects become strong free-cash-flow generators shortly after ramping, with potential conversion of roughly 100% of post-tax EBITDA.

The company completed its previously disclosed $20 billion at-the-market equity issuance during the quarter.

AI Capacity Delivery Accelerates

Co-Chief Executive Officer Clay Magouyrk said on the call that Oracle delivered 850 megawatts of AI capacity, including more than 300,000 graphics processing units, during the quarter — nearly three times the amount delivered in the preceding fourth quarter and representing 73% of the capacity delivered during the prior fiscal year.

Oracle closed more than $30 billion in additional AI contracts during the quarter without requiring additional cash from the company, Magouyrk said. GPU utilization was 97.9%, and capacity that came up for renewal was renewed or resold at prices 20% above prior contracts. At Oracle’s Abilene site, the company delivered 131,000 GPUs in 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. Regarding development sites in New Mexico and Wisconsin, he said neither location would affect fiscal 2027 revenue or earnings guidance. Construction in New Mexico is on track as the company works through an air-permit process, and Wisconsin construction is also on track as it works with energy partners on power delivery, he said.

Applications and AI Products

Co-Chief Executive Officer Mike Sicilia said on the call that Oracle’s SaaS business grew 10%, with Fusion revenue up 14%. Oracle Health continued to accelerate, and industry applications grew by more than 20%.

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, and the number of customers’ 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, intended to compress application implementations from years to months.

Oracle announced general availability of NetSuite Next, an AI-powered agentic experience, and noted that its NetSuite AI Connector Service has been adopted by more than 10,000 customers. Multicloud database revenue increased 353% year over year, and multicloud customers grew 180%, Magouyrk said.

Analyst Reactions

Several analysts issued reports following the results. According to MarketBeat, Cantor Fitzgerald reaffirmed an “overweight” rating on Oracle with a $284 price target. Wolfe Research reiterated an “outperform” rating with a $225 target. Stifel Nicolaus set a $200 price target. Oppenheimer maintained an “outperform” rating, and UBS Group reissued a “buy” rating. BMO Capital Markets lowered its price target to $195 from $220 but retained an “outperform” rating, citing continued upside alongside valuation and execution concerns.

The stock has an average rating of “Moderate Buy” from analysts tracked by MarketBeat, with a consensus price target of $255.92.

Dividend and Insider Sale

Oracle declared a quarterly dividend of $0.50 per share, payable Oct. 23 to shareholders of record Oct. 9, according to the company. That represents an annualized dividend of $2.00, yielding 1.3%, and a dividend payout ratio of 34.31%.

In a separate filing, Vice Chairman Jeffrey Henley sold 400,000 shares of Oracle at an average price of $159.16 on June 24 under a pre-arranged Rule 10b5-1 trading plan, as reported by MarketBeat. The sale reduced his stake by 50%. Company insiders collectively own 40.90% of Oracle’s stock.