Key Highlights
- ORCL shares surged 5.2% to $150.58 following fiscal first-quarter earnings that showed revenue climbing 30% year over year to $19.3 billion
- Infrastructure as a service cloud revenue skyrocketed 121% to $7.4 billion, fueled by compute sales to OpenAI
- Earnings per share reached $1.92, exceeding analyst projections by $0.18, while adjusted operating margin hit 42%
- Chairman Larry Ellison withdrew his previously disclosed plan to divest up to 50 million Oracle shares
- The company holds approximately $664 billion in contracted future revenue with AI-focused agreements totaling around $30 billion
Shares of Oracle (ORCL) rallied 5.2% on Thursday to close at $150.58, reaching an intraday peak of $152.00, as investors responded enthusiastically to the enterprise software giant’s fiscal first-quarter performance and strengthening AI business prospects.
The company reported quarterly revenue of $19.3 billion, representing a 30% increase from the same period last year and surpassing Wall Street’s $19.1 billion forecast. The session began with Oracle closing the prior day at $143.16.
The most impressive metric was cloud infrastructure as a service revenue, which exploded 121% to reach $7.4 billion, exceeding the consensus estimate of $7.1 billion. This division provides computing resources to artificial intelligence firms, with OpenAI serving as a major customer.
The company’s adjusted operating margin expanded to 42%, improving from slightly above 41% in the year-ago quarter. This margin enhancement occurred despite substantial increases in data center investments to accommodate AI computing demands.
Earnings per share came in at $1.92, marking a 31% year-over-year increase and beating expectations by $0.18. The stronger-than-anticipated bottom line resulted in Oracle using less cash than forecasted.
OpenAI Fundraising Reports Provide Additional Lift
News that OpenAI is considering a fresh funding round valued between $1.2 trillion and $1.5 trillion provided an additional catalyst for Oracle shares. Oracle reportedly maintains a $300 billion, five-year computing contract with OpenAI, and positive signals about OpenAI’s financial stability decrease concerns about potential contract fulfillment issues.
Oracle’s remaining performance obligationārepresenting contracted revenue yet to be recognizedāstands at approximately $664 billion. Within this backlog, AI-focused agreements account for roughly $30 billion.
Chairman Larry Ellison terminated a previously announced plan to sell as many as 50 million Oracle shares, eliminating a potential headwind that had pressured investor sentiment earlier this week.
Company leadership projected “at least” $90 billion in revenue for fiscal year 2027, employing more assertive language compared to the previous quarter’s outlook. The FY2027 EPS guidance also received a modest upward revision to $8.10.
Capital expenditure projections for fiscal 2027 remained unchanged at slightly above $90 billion, consistent with the prior quarter’s estimate. Executives suggested this figure should decline over time.
Wall Street Perspectives and Price Targets
KeyCorp elevated its FY2027 EPS projection to $6.82 from $6.50 and boosted its FY2028 estimate to $8.95 from $8.70 in response to the quarterly results.
DA Davidson and Wolfe Research maintain buy or outperform ratings with $225 price targets. Mizuho projects a $320 target. Royal Bank of Canada reduced its target from $190 to $165 while maintaining a sector perform rating.
The average analyst rating across 41 firms stands at “Moderate Buy” with a mean price target of $252.58.
Oracle maintains a market capitalization near $455 billion, trades at a P/E ratio of 23.60, and is valued at approximately 17 times forward earnings. The S&P 500 currently trades at around 19 times forward earnings.
The stock’s 50-day moving average stands at $141.12. ORCL has demonstrated reliable buying interest above the $140 level since early August.
Oracle declared a quarterly dividend of $0.50 per share, scheduled for payment on October 23, with an ex-dividend date of October 9.
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