Oracle beat Wall Street's fiscal first-quarter targets and raised its full-year profit guidance, sending shares up about 7% in premarket trading Friday. More than $30 billion in new AI cloud contracts signed during the quarter pushed the company's future contracted revenue to $664 billion.
Oracle earned $1.92 per share on an adjusted basis on revenue of $19.35 billion for its fiscal first quarter of 2027, beating analyst estimates of $1.73 per share on $19.13 billion in revenue. Shares climbed about 7% in premarket trading Friday as investors welcomed the beat.
AI cloud demand outpaces supply
According to Oracle: "Customer demand for AI Cloud Training and Inferencing Services continues to grow faster than supply." The company booked more than $30 billion of additional AI cloud contracts in the quarter, lifting its remaining performance obligations — future revenue from signed customer contracts not yet recognized — to $664 billion.
Oracle Cloud Infrastructure competes directly with Amazon's AWS, Microsoft's Azure and Google's cloud unit, and Oracle has increasingly positioned itself as a hyperscaler to quell investor worries over what AI could mean for its core database and enterprise software business. But jitters remain over the debt the company keeps raising to fund its data center buildout: free cash flow came in negative for a sixth straight quarter, and its backlog conversion rate has drawn scrutiny.
Guidance raised for fiscal 2027
For fiscal year 2027, Oracle now expects adjusted earnings per share of $8.10 on revenue of at least $90 billion, up from a previous forecast of $8.05 per share on the same $90 billion revenue target. For the second quarter, on a constant currency basis, the company sees adjusted earnings per share of $1.83 to $1.91 on revenue growth of 30% to 34%, against an analyst estimate of $1.89.
Citi analysts said the quarter reinforces the bull case heading into Oracle's Investor Day, scheduled for October 28 in Las Vegas, and called management's FY2027 framework conservative given the size of the beat.
AI trade cools around the report
Oracle's results land as the broader AI trade cools in the stock market. Chip stocks slid more than 20% in July on concerns over returns from AI infrastructure spending, before sentiment partly recovered in August on strong Nvidia results. A resurgence in U.S.-Iran military tension and a global bond rout have since pulled investor attention away from the AI trade.
Source: Investing.com
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