Oracle reported first-quarter results for its latest fiscal year that came in ahead of market expectations, with cloud infrastructure revenue and overall profit both beating forecasts. The figures suggest the company’s capital push into AI data centers is beginning to translate into business results.
Cloud infrastructure revenue reached $7.4 billion
During the quarter, Oracle’s cloud infrastructure business generated $7.4 billion in revenue, up 121% from a year earlier and above the $7.19 billion average analyst estimate compiled by Bloomberg. Total quarterly revenue rose 30% to $19.3 billion. Adjusted earnings per share were $1.92, also above the market expectation of $1.75.
Remaining performance obligations, a metric used to gauge future revenue visibility, climbed to $664 billion, signaling that demand for AI compute-related contracts remained solid. Backed by the earnings release and order data, Oracle shares rose about 5% in after-hours trading.
OpenAI’s latest model was trained at Oracle’s flagship Texas site
To meet computing demand from large customers including OpenAI, Oracle has been expanding GPU capacity and data center facilities needed for AI servers. Management said OpenAI’s latest model was trained at the company’s flagship data center in Texas, where 75% of planned capacity has already been delivered to customers.
Across the company, Oracle added 850 megawatts of data center compute capacity during the quarter.
Capital expenditure hit $28.5 billion
Oracle spent $28.5 billion in capital expenditure during the quarter to support data center expansion and the purchase of core components. The company’s chief financial officer confirmed that Oracle is keeping its annual capex target at $70 billion through May 2027, and expects an additional $20 billion to $25 billion tied to prepayments for certain components.
Even with that level of spending, Barclays analysts said pressure on free cash flow was lower than the market had expected because operating expenses were kept under control.
More than $30 billion in new AI cloud contracts
Oracle added more than $30 billion in AI cloud contracts in the quarter, pushing total remaining performance obligations to $664 billion, above the market estimate of $641.8 billion.
By segment, cloud applications revenue rose 10% to $4.22 billion, while traditional on-premise software revenue slipped 3% to $5.55 billion. The company said the revenue shift matched the long-running technology transition as enterprise customers continue moving from on-premise architecture to cloud environments.
Oracle completed a $20 billion ATM equity sale
Before the earnings release, the market had been concerned about Oracle’s financing needs, construction challenges, and rising component costs. Those worries had pulled the stock about 38% below its previous peak.
Oracle also said it had completed a $20 billion at-the-market equity offering as part of its capital structure adjustment. After the company released better-than-expected profit and contract growth figures, ORCL traded up about 5% after hours, moving back above $160.