Oracle’s AI cloud business has gone into orbit, with infrastructure revenue more than doubling while the company shovels billions into data centres.
Wall Street’s cocaine nose jobs had been growing increasingly nervous about Oracle’s infrastructure binge. Shares were down roughly 20 per cent for the year before the latest results as investors questioned whether its enormous AI contracts would generate cash quickly enough to justify the spending.
Those fears intensified after Oracle said fiscal 2027 capital expenditure could reach about $70 billion on a net cash basis and outlined plans to raise roughly $40 billion through debt and equity. The company spent $55.7 billion on capital expenditure during fiscal 2026, leaving free cash flow $23.7 billion in the red and making its AI expansion considerably more dependent on borrowed money than those of some larger cloud rivals.
Oracle reported fiscal first-quarter 2027 revenue of $19.3 billion, up 30 per cent year on year, as demand for its cloud infrastructure continued to accelerate.
According to Oracle, total cloud revenue climbed 62 per cent to $11.6 billion. Infrastructure-as-a-service revenue was the star turn, soaring 121 per cent to $7.4 billion. Cloud applications revenue rose a more modest 10 per cent to $4.2 billion.
Traditional software continued heading in the opposite direction. Software revenue fell three per cent to $5.5 billion as customers continued moving from on-premises products to cloud services. Services revenue rose five per cent to $1.4 billion while hardware revenue increased 15 per cent to $774 million.
Oracle said it delivered another 850MW of data centre capacity during the quarter as it races to satisfy AI customers apparently capable of consuming computing infrastructure faster than anyone can build it. Since the end of the previous quarter, Oracle delivered more than 300,000 GPUs to its AI cloud customers. That was almost three times the capacity delivered during its fiscal fourth quarter.
Demand remains greater than available supply. Oracle booked more than $30 billion of additional AI cloud contracts during the quarter. That helped push remaining performance obligations, essentially contracted revenue waiting to be recognised, to $664 billion. The figure increased by $209 billion from a year earlier.
The company said the structure of those new contracts would not require it to increase its existing capital-raising plans. Oracle has been spending enormous sums to build the infrastructure needed to turn those contracts into revenue.
Operating cash flow reached a record $23 billion during the quarter, up 184 per cent. Free cash flow nevertheless came in at negative $5 billion as the data centre construction bill continued chewing through the proceeds.
Oracle completed the sale of $20 billion of common stock during the quarter through its previously announced at-the-market equity programme. The company has previously said its fiscal 2027 capital investment programme would require roughly $40 billion of debt and equity financing as it expands Oracle Cloud Infrastructure.
GAAP operating income increased 57 per cent to $6.7 billion, while non-GAAP operating income climbed 31 per cent to $8.2 billion. GAAP net income available to common shareholders reached $4.7 billion, up 60 per cent. Non-GAAP net income rose 34 per cent to $5.8 billion.
Diluted GAAP earnings per share increased 55 per cent to $1.56, while non-GAAP earnings per share rose 30 per cent to $1.92. Oracle expects the accelerator to remain jammed down this quarter.
Second-quarter revenue is expected to grow between 30 and 34 per cent, while total cloud revenue is forecast to increase between 65 and 71 per cent in US dollar terms. Non-GAAP earnings per share are expected to land between $1.85 and $1.93. For the full fiscal year, Oracle expects revenue of at least $90 billion and non-GAAP earnings per share of $8.10.
The board declared a quarterly dividend of $0.50 per share, payable on 23 October 2026 to shareholders on record at the close of business on 9 October.
