Key Highlights
- Cloud infrastructure revenue at Oracle skyrocketed 121% compared to the same quarter last year, reaching $7.4 billion and exceeding analyst projections of $7.19 billion
- The company reported adjusted earnings per share of $1.92, surpassing Wall Street’s consensus estimate of $1.74; overall revenue reached $19.3 billion, marking a 30% increase
- Shares rose approximately 4% during extended trading hours following a regular session close at $152.94, though the stock remains 38% below its June 1 peak
- The company’s complete backlog has reached $664 billion, with approximately half of that amount linked to one cloud agreement with OpenAI
- Projected capital spending for the current fiscal year stands at $92 billion, a significant jump from $56 billion in the previous year, resulting in negative free cash flow
Oracle delivered first-quarter results on Thursday that exceeded Wall Street projections across nearly all metrics, pushing shares up roughly 4% during after-hours trading. The stock had finished the regular session at $152.94, declining 5.4% during the trading day.
The company’s adjusted earnings per share registered at $1.92, climbing from $1.47 in the corresponding period last year and surpassing the analyst consensus of $1.74. Overall revenue totaled $19.3 billion, representing a 30% year-over-year increase and beating the estimated $19.1 billion.
The primary metric drawing investor attention was the cloud infrastructure segment’s performance. This division, which provides AI computing capabilities through internet-based services, surged 121% to reach $7.4 billion. Wall Street analysts had forecast $7.19 billion.
Oracle’s remaining business operations expanded by merely 3%. This disparity highlights the company’s strategic direction and future focus.
The company’s complete order backlog currently stands at $664 billion. Roughly half of this figure stems from one agreement with OpenAI. This heavy reliance has increasingly linked Oracle’s stock performance to investor sentiment surrounding the artificial intelligence startup.
Optimism around OpenAI diminished during the summer months as its primary rival, Anthropic, rapidly gained market share. Downward pricing pressure from more affordable AI models compounded investor concerns. OpenAI reduced pricing throughout its GPT-5.6 model lineup during July and August. Oracle’s stock declined 38% from its June 1 high point leading up to Thursday’s earnings release.
A reversal occurred in September. Oracle stock had advanced 8.4% before the earnings announcement.
Cloud Operations Taking Center Stage
Cloud infrastructure accounted for merely 18% of Oracle’s total revenue during fiscal year 2025. The company projects this segment will comprise 60% of revenue in the upcoming year. This transformation is fundamentally restructuring Oracle’s financial profile.
Capital expenditure serves as the clearest indicator of this strategic pivot. Oracle invested $28 billion in capex during the first quarter alone. For the entire fiscal year, the company anticipates spending $92 billion, compared to $56 billion in the prior year. During fiscal 2024, total capex amounted to only $6.9 billion.
Consequently, free cash flow has become negative. The company has halted share repurchases and the outstanding share count is increasing. Industry analysts don’t anticipate free cash flow to return to positive territory until 2030.
To finance this infrastructure expansion, Oracle took on $37 billion in long-term debt last year and executed a $20 billion at-the-market equity offering during the first quarter.
Infrastructure Expansion Accelerating
Oracle expanded its data center capacity by 850 megawatts during the quarter. The company is constructing infrastructure to support OpenAI and other major AI clients.
Despite the substantial capital outlays, adjusted operating margin improved compared to last year. Oracle has successfully balanced cloud’s reduced gross margins by implementing stricter operating expense management.
For the upcoming second quarter, Oracle provided guidance that aligns closely with analyst projections. For the complete fiscal year, the company slightly raised both adjusted EPS and revenue forecasts.
The segment of Oracle’s backlog excluding OpenAI more than doubled during the past year.
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