Oracle's fiscal first-quarter revenue rose 30% to $19.35 billion, beating analyst estimates, as cloud infrastructure revenue jumped 121%. The company is funding its AI data center buildout with $125 billion in debt and a negative $5.4 billion in free cash flow, but customer prepayments and a growing contract backlog are helping cover the cost.
Oracle's fiscal first-quarter revenue climbed 30% to $19.35 billion, beating the LSEG consensus estimate of $19.14 billion. Net income jumped 60% to $4.7 billion from $2.93 billion a year earlier. Shares whipsawed on the results, popping after the open before sinking back to near flat.
Cloud revenue surges on AI infrastructure demand
Cloud revenue rose 62% from a year earlier to $11.6 billion, driven by a 121% jump in cloud infrastructure revenue, while cloud application revenue grew 10%. Cloud infrastructure revenue reached $7.4 billion for the quarter, according to Crypto Briefing. Oracle also delivered 850 megawatts of additional data center capacity and supplied more than 300,000 GPUs to its AI Cloud customers. Utilization on those chips reached 97.9%.
The company's remaining performance obligations reached $664 billion, up $209 billion year-over-year, as it booked more than $30 billion in new AI cloud contracts during the quarter. Oracle said customer demand for AI cloud training and inferencing services continues to grow faster than supply.
Customers prepay to help fund the buildout
Oracle collected $11.36 billion in customer prepayments during the quarter, covering a chunk of its $28.5 billion in capital expenditures for the period. Its customer roster includes Nvidia, Meta, OpenAI, Advanced Micro Devices, and SpaceX's AI business. The OpenAI relationship includes a reported multi-year Stargate commitment exceeding $300 billion, according to Crypto Briefing.
Its capital expenditures totaled $55.7 billion in fiscal 2026, and it has outlined $90 billion to $95 billion in gross capex for fiscal 2027, or roughly $70 billion net of customer contributions. The company posted negative free cash flow of $5.4 billion for the quarter, compared with negative $362 million a year earlier.
Debt load weighs against a bullish outlook
Even after Friday's rally, Oracle is down about 20% this year on concern over the debt the company has raised to fund its AI infrastructure buildout, which now stands at $125 billion. Citi reiterated its buy rating, with analysts writing the quarter "checked nearly every box and reinforces the bull case."
Morgan Stanley kept an equal-weight rating and a $210 price target, citing gross-margin pressure and a need for more evidence on the economics of Oracle's GPU-as-a-service business. Oracle guided for second-quarter revenue growth of 30% to 34%, with cloud revenue rising between 64% and 70%, and expects total fiscal 2027 revenue of at least $90 billion.
Sources: CNBC, CNBC, Crypto Briefing
Trading involves risk.
Risk Disclaimer
