Oracle shares climbed 6% in Friday premarket trading after fiscal first-quarter results eased Wall Street's worries about AI spending. Analysts pointed to steady capital-expenditure guidance, 121% growth in cloud infrastructure revenue and more than $30 billion in new AI contracts as evidence the company's AI bet is paying off.
Analysts say bear case loses ground
Oracle shares were climbing 6% in Friday's premarket action after the company's latest earnings report. Piper Sandler analyst Billy Fitzsimmons noted that Oracle kept its capital-expenditure forecast unchanged rather than raising it, easing a key investor concern about the cost of funding its growth.
According to Piper Sandler: "Several of Oracle's bear cases were addressed head on". Bernstein analyst Mark Moerdler added that the report gave investors more clarity around a positive investment case for the stock, noting Oracle is diversifying its customer base while growing remaining performance obligations without needing meaningful extra cash.
Cloud growth and AI bookings drive the numbers
Oracle posted fiscal first-quarter 2027 revenue of $19.35 billion, a 30% jump from a year earlier and ahead of analyst estimates of roughly $19.14 billion. Cloud infrastructure revenue surged 121% year-over-year to $7.4 billion, while total cloud revenue reached $11.6 billion, up 62%.
Remaining performance obligations climbed to $664 billion, up $209 billion from a year earlier, and new AI cloud contracts alone accounted for more than $30 billion in the quarter. JPMorgan analysts led by Samik Chatterjee highlighted that Oracle delivered 850 megawatts of new AI computing capacity, three times what it added in the May quarter.
Margins still worry some analysts
Not every analyst was fully convinced. Morgan Stanley's Sanjit Singh said he still wants to see stabilization in Oracle's gross margins, along with clearer timing on when new data centers will come online.
The cash picture reflects that spending. Oracle's free cash flow came in at negative $5.4 billion, driven by $28.5 billion in capital expenditure aimed mainly at data-center expansion. The company pointed to customer prepayments on multi-year cloud contracts to offset the burn. Despite that cash burn, Oracle raised its full-year revenue guidance to at least $90 billion.
Sources: MarketWatch, Crypto Briefing
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