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Oracle Shares Jump on Blowout AI Cloud Revenue and Strong Forecast
Oracle Corp. (ORCL) shares surged approximately 7% in after-hours trading Wednesday after the company announced fiscal first-quarter earnings and revenue that exceeded analyst expectations, powered by soaring demand for its artificial intelligence cloud services.
Strong Q1 Performance
The enterprise software giant reported strong results for the quarter ending in its fiscal year 2027. The company posted significant growth across key financial metrics, signaling robust business momentum.
- Adjusted Earnings Per Share (EPS): $1.92, compared to the consensus estimate of $1.74.
- Total Revenue: $19.35 billion, a 30% increase year-over-year, beating the expected $19.14 billion.
- Operating Cash Flow: $23.1 billion, marking a 184% increase from the prior year.
AI Cloud Demand Accelerates
The primary driver of the beat was Oracle's cloud division, particularly its infrastructure services catering to the AI boom. Cloud infrastructure revenue more than doubled, climbing 121% year-over-year to $7.4 billion. Total cloud revenue, which includes applications, rose 62% to $11.6 billion.
AdUnderscoring future growth, Oracle's remaining performance obligations (RPO), a measure of contracted future revenue, hit a record $664 billion. The company noted it signed more than $30 billion of new AI cloud contracts during the quarter, contributing significantly to the RPO figure which surpassed analyst projections of $630.6 billion.
Upbeat Outlook and Rising Costs
Looking ahead, Oracle provided an optimistic forecast. The company guided for full-year fiscal 2027 revenue to reach a minimum of $90 billion with an adjusted EPS of $8.10. For the upcoming quarter, management projects revenue growth between 30% and 34%.
However, the rapid expansion comes at a cost. Oracle's capital expenditures surged to $28.5 billion from $8.5 billion a year ago, reflecting heavy investment in data centers to support AI workloads. Despite the after-hours rally, the stock remains down about 22% year-to-date, highlighting the significant cash outlay and long-term nature of its AI infrastructure buildout.
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