Oracle’s revenue path looks clearer after its latest quarter. The debate has shifted to funding.
In a Sept. 11, 2026 report cited by TechFlowPost, JPMorgan reiterated an Overweight rating on Oracle and kept its $200 price target after the company reported F1Q27 remaining performance obligations, or RPO, of $664 billion. That figure was up $26 billion from the prior quarter and 46% from a year earlier. Oracle’s infrastructure-as-a-service, or IaaS, revenue reached $7.4 billion, up 121% year over year.
JPMorgan said newly signed AI contracts exceeded $30 billion and were mainly structured with prepayments or bring-your-own-hardware, or BYOH, terms. Under that setup, the bank said, Oracle does not need to commit additional cash. Investors are still arguing over whether the company can get through its capex peak after FY28, so while the latest numbers addressed questions around revenue conversion, the funding path remains the central issue.
IaaS growth topped expectations
Oracle reported F1Q27 total revenue of $19.35 billion, up 30% from a year earlier. That was above JPMorgan’s $19.25 billion estimate and ahead of the $19.13 billion consensus.
Cloud revenue came in at $11.6 billion, up 62%. Within that total, IaaS revenue rose 121% to $7.4 billion, SaaS revenue was $4.2 billion, up 10%, and software revenue was $5.6 billion, down 3%.
Gross margin was 61.0%, below both JPMorgan’s estimate and market consensus of 62.0%. The report attributed that shortfall mainly to data center ramp costs and infrastructure mix. Operating profit reached $8.15 billion, with a 42.1% margin, in line with JPMorgan’s forecast. Earnings per share were $1.92, above JPMorgan’s $1.76 estimate and the $1.75 consensus, with the upside largely coming from below-the-line items.
RPO expanded by $26 billion quarter over quarter
Oracle’s RPO rose to $664 billion in the quarter, up 46% year over year and $26 billion from the prior quarter.
JPMorgan said new AI cloud contracts signed during the quarter topped $30 billion. Management said those contracts still require capital spending, but not additional Oracle cash, with funding expected to come through vendor financing, customer hardware purchases, or customer prepayments. About half of the RPO is expected to convert into revenue within 36 months.
Delivery pace accelerated as GPU utilization stayed high
On capacity delivery, Oracle delivered 50MW in the quarter, close to three times the full-season level recorded in F4Q26. The report noted that this delivery did not include the flagship sites investors have been watching closely.
Since F4Q26, cumulative delivered capacity has reached 850MW. GPU utilization across the current cluster base was 97.9%. The Abilene site delivered 131,000 GPUs, or 1.9 times the F4Q level, and 75% of that capacity has already been handed over. Construction in New Mexico is progressing on schedule, while grid power for the Wisconsin site is still in the design stage.
FY27 guidance beat consensus, but funding questions remain
Oracle guided FY27 revenue to at least $90 billion, implying 34% year-over-year growth and coming in above the $89.6 billion consensus. The company also guided FY27 EPS to $8.10, above the $8.0 market consensus.
Capex guidance was set at $90 billion to $95 billion, while net cash capex was capped at no more than $70 billion. That implies $20 billion to $25 billion of offset from prepayments and vendor financing.
Management reiterated that FY27 and FY28 will mark the peak capex years, but did not provide a timeline for free cash flow to turn positive. JPMorgan expects Oracle to average more than $20 billion in financing over the next several years and said free cash flow is likely to remain negative through FY30.
Investors, according to the report, are concerned that tighter access to credit markets or equity markets could force Oracle to slow construction or raise capital on dilutive terms.
$200 price target implies about 31% upside
JPMorgan’s $200 target is based on roughly 13x EV to pro forma operating profit, tied to a 2028 operating profit forecast of $62 billion. Against Oracle’s Sept. 10, 2026 share price of $152.94, that points to about 31% upside.
The bank said Oracle continues to trade at a meaningful valuation discount to AI infrastructure peers and enterprise software companies, leaving room for upside from profit growth and multiple re-rating.
Risks center on customer concentration, funding and execution
JPMorgan flagged customer concentration as a key risk. OpenAI, either directly or through the Stargate project, accounts for more than 50% of Oracle’s RPO, the report said. If that anchor customer restructures, cuts commitments, or cannot pay, Oracle’s RPO could overstate recoverable revenue.
Other downside risks listed in the report include access to funding, cost of capital, capacity delivery, and margin ramp.
TechFlowPost said the article was a整理 and interpretation by Chaoxiang Research of a third-party brokerage report from JPMorgan dated Sept. 11, 2026, combined with public market information. It added that the ratings, price target, earnings forecasts and related views cited in the piece were those of the brokerage analyst and represented only the institution’s position, not Chaoxiang Research’s view, and did not constitute investment advice.
The piece also carried a separate reminder that markets involve risk, decisions should be made independently, and the article should not be used as a basis for buying or selling any security.
