Oracle sold more cloud computing power in the first quarter of fiscal year 2027 than ever before: Revenue from cloud infrastructure rose by 121 percent to $7.4 billion. The software company delivered over 300,000 graphics processors to customers in the three months and is already booking new AI cloud contracts worth more than $30 billion.
Cloud infrastructure grows faster than the rest of the company
The total revenue of the company climbed to $19.3 billion in the quarter, an increase of 30 percent compared to the same period last year. According to the quarterly report, the cloud business alone contributed $11.6 billion, an increase of 62 percent. Within this segment, the rental of computing capacity for artificial intelligence grew particularly: Revenue from CPU and GPU infrastructure increased by 151 percent to $6.5 billion. In contrast, traditional cloud applications like NetSuite and the Fusion Suite grew only in the single digits to low double digits. Net income reached around $4.7 billion, sixty percent more than the previous year; earnings per share exceeded analysts’ expectations. Oracle thus confirmed its course to transform the core business of databases and enterprise software in favor of renting AI data centers. For the ongoing second quarter, the company expects revenue growth of 30 to 34 percent, and for the entire fiscal year at least $90 billion in revenue.
Order backlog and GPU deliveries grow in tandem
The order backlog (Remaining Performance Obligations) rose to $664 billion, an increase of $209 billion within a year and $26 billion alone compared to the previous quarter. Oracle continues to book new contracts faster than it can build capacity: The utilization of AI infrastructure was last at 97.9 percent. In the past quarter, the company delivered more than 300,000 graphics processors and expanded its data center capacity by 850 megawatts. At the same time, Oracle invested around $28 billion in new facilities – more than the operating cash flow of $23 billion provided, causing free cash flow in the quarter to fall to minus $5 billion. The expansion is also financed through the capital market: Just in the first quarter, Oracle placed shares worth $20 billion. This was already the second major capital measure of the year, after the company also cut jobs in August to finance the AI expansion.
Stock fluctuates despite record numbers
The reaction on the stock market was mixed. Oracle’s stock initially lost about 5.4 percent to $152.94 in regular trading on the day of the numbers, before recovering in after-hours trading to $159.58, an increase of over four percent. As Yahoo Finance reports, the stock has already risen by more than 30 percent since a year-low in July, but is still about one-fifth below the level at the beginning of the year. The reason for the skepticism of many investors remains the financing of the AI expansion through debt: The rating agency S&P downgraded Oracle to BBB- in July, just one notch above junk status. Analyst Cory Johnson from the research firm Epistrophy Capital Research nonetheless described Oracle as one of the most important infrastructure partners of the major AI providers, whose demand for computing capacity is growing faster than supply.
It will be crucial whether Oracle can refinance the pre-financing of the data centers before customers actually call up and pay for their booked capacity. So far, the order backlog is growing faster than the cash flow that would need to service the debt. For companies that develop AI applications themselves, the ongoing shortage primarily means: Those who book computing capacity with one of the major cloud providers today must continue to expect waiting times and rising prices.
