Oracle (ORCL) Q1 2026 Earnings Report

Oracle (ORCL) shares surged as much as 27% in after-hours trading on Tuesday, buoyed by optimistic future growth projections fueled by significant new cloud contracts. This investor enthusiasm overshadowed the company’s slightly weaker-than-expected earnings and revenue for the fiscal first quarter.

Here’s a comparison against LSEG consensus estimates:

• Earnings per share: $1.47 adjusted vs. $1.48 expected
• Revenue: $14.93 billion vs. $15.04 billion expected

The company’s Q1 revenue, which ended August 31, rose 12% year-over-year to $14.93 billion from $13.3 billion, according to a statement. Net income remained relatively stable at $2.93 billion, translating to $1.01 per share, compared to $2.93 billion, or $1.03 per share, during the same period last year.

A key indicator of Oracle’s future revenue, its Remaining Performance Obligation (RPO), reached a staggering $455 billion. This represents a remarkable 359% increase from the previous year, signaling robust demand for Oracle’s cloud services. Notably, during the quarter, OpenAI formalized an agreement with Oracle to develop a substantial 4.5 gigawatts of U.S. data center capacity optimized for AI workloads. This partnership underscores Oracle’s strategic positioning in the rapidly expanding AI infrastructure market.

Oracle, alongside industry giants like Microsoft, is strategically capitalizing on the AI boom. Its cloud infrastructure business, coupled with access to Nvidia’s coveted graphics processing units (GPUs), crucial for handling demanding AI workloads, have positioned the company advantageously. CEO Safra Catz highlighted the significance of these developments, stating that Oracle secured four multi-billion-dollar contracts with three distinct customers during the quarter. These contracts, while not explicitly detailed, are indicative of the growing enterprise adoption of Oracle’s AI-optimized cloud offerings.

Further diversifying its service offerings, Oracle announced a collaboration with Google, integrating Google’s Gemini AI models into its cloud infrastructure. This integration will enable Oracle’s enterprise clients to leverage advanced AI capabilities within their existing Oracle ecosystems, accelerating their adoption of agentic AI solutions.

Larry Ellison, Oracle’s co-founder, chairman, and technology chief, provided further insight into the company’s AI strategy. He announced the forthcoming launch of the Oracle AI Database service in October. This innovative service will enable clients to run AI models from OpenAI and other providers directly on their data stored within Oracle databases. This deepening product integration with OpenAI reinforces Oracle’s commitment to providing a comprehensive AI platform. Moreover, Oracle revealed that it had already deployed OpenAI’s advanced GPT-5 AI model across its database and cloud applications, demonstrating a proactive approach to integrating cutting-edge AI technologies.

Oracle’s cloud infrastructure revenue reached $3.3 billion, reflecting a substantial 55% year-over-year increase. This growth rate marginally exceeds the 52% growth reported in the fiscal fourth quarter, indicating continued momentum in this key segment.

Looking ahead, Oracle projects its cloud infrastructure revenue to reach $18 billion in fiscal year 2026. This ambitious target implies a 77% growth rate from the roughly $10 billion recorded in fiscal 2025. The company further forecasts aggressive growth, anticipating revenues of $32 billion in 2027, $73 billion in 2028, $114 billion in 2029, and $144 billion in 2030.

Kirk Materne, an Evercore ISI analyst with a buy rating on Oracle stock, expressed some reservation regarding the long-term projections. In a note to clients, he stated that his previous estimate for fiscal 2029 cloud infrastructure revenue was $108 billion, slightly lower than Oracle’s forecast.

While Oracle positions itself for aggressive growth in the cloud infrastructure market, it faces stiff competition from established players. Microsoft reported Azure cloud infrastructure revenue of $75 billion over the past 12 months. Amazon, the market leader, saw its cloud revenue approach $112 billion during the same period.

For the fiscal second quarter, Oracle anticipates adjusted earnings per share of $1.61 to $1.65, with revenue growth projected between 14% and 16%. This guidance aligns with analysts’ expectations of $1.62 per share on $16.21 billion in revenue, which implies 15% growth.

CEO Safra Catz further announced that capital expenditures for the new fiscal year are expected to be around $35 billion, representing a substantial 65% increase. This significant investment reflects Oracle’s commitment to expanding its infrastructure and supporting its ambitious growth targets.

Prior to the after-hours surge, Oracle shares had already reached a record high last month, up 45% year-to-date, outpacing the S&P 500 index’s 11% gain. A gain of 22% or higher on Wednesday would mark the stock’s best single-day performance since the dot-com boom of 1999 and its third-largest rally ever. It would also propel the company’s market capitalization beyond $800 billion, solidifying its position as a dominant force in the technology sector.