Oracle beat Wall Street's revenue expectations for its first fiscal quarter on Thursday and raised its forecast for annual profit, boosted by strong demand for its cloud computing services as business spending on artificial intelligence keeps climbing.
The upbeat report signals that Oracle's heavy investment in data centers is paying off, helping the company secure more contracts with businesses.
Backlog and Revenue Figures
Oracle's remaining performance obligations, the backlog of contracted but not yet delivered business, rose to $664 billion at the end of the first fiscal quarter, up from $638 billion the previous quarter. Analysts had expected the figure to come in at $639.89 billion, according to data from Visible Alpha.
Revenue for the quarter rose 30% to $19.3 billion, ahead of the average analyst estimate of $19.14 billion compiled by LSEG.
Pressure on the Stock
Oracle shares have come under heavy pressure this year amid growing investor concern over the company's sharply rising capital expenditures, which have squeezed its free cash flow. In July, S&P Global downgraded Oracle's credit rating, citing weak cash flow and rising business risk.
Investors have also raised concerns about Oracle's Stargate project, amid reports of delays in its rollout linked to workforce shortages, licensing approvals and electricity availability. Stargate is a large-scale data center initiative tied to the broader race among technology firms to build out AI computing capacity.
Data Center Expansion
Even so, analysts expect Oracle's revenue to accelerate significantly as the company expands its network of data centers. Oracle said it brought 850 megawatts of power online during the June-to-August quarter.
The company's heavy spending has helped it break into a market dominated by larger technology groups such as Amazon, Microsoft and Alphabet's Google, as businesses race to secure cloud and AI computing capacity.
Outlook for the Year Ahead
Oracle now expects adjusted earnings per share of $8.10 for fiscal year 2027, up from its previous forecast of $8.05. Analysts on average expect annual earnings of $8.07 per share. Oracle is forecasting revenue of at least $90 billion for fiscal year 2027.
For the second quarter, Oracle expects revenue growth of 30% to 34% and adjusted earnings of between $1.85 and $1.93 per share, with both forecasts in line with market expectations.
