Oracle Beats Quarterly Earnings Estimates While AI Cloud Revenue More Than Doubles, Raises Full-Year Guidance

Oracle topped Wall Street’s expectations on both revenue and profit in its fiscal first-quarter 2027 earnings report, driven by explosive growth in the cloud-computing capacity it rents out to AI companies, and raised its forecast for the rest of the year. The company’s own results, released after the market closed on September 10, 2026, covered the quarter that ended August 31, 2026.

Key facts

Revenue: about $19.3 billion, up 30% from a year earlier, ahead of the roughly $19.1 billion analysts expected
Adjusted earnings: $1.92 per share, above the $1.74 analysts forecast; GAAP (Generally Accepted Accounting Principles) earnings $1.56 per share, up 55%
Net income: $4.68 billion, up nearly 60% from $2.93 billion a year earlier
Total cloud revenue: $11.6 billion, up 62%; cloud infrastructure revenue more than doubled to $7.4 billion, up 121%
Remaining performance obligations (contracted backlog): $664 billion, up $209 billion from a year earlier
Full-year guidance raised: at least $90 billion in revenue, adjusted earnings of about $8.10 per share
Free cash flow: negative roughly $5 billion for the quarter, versus a shortfall of about $362 million a year earlier
Headcount: down roughly 21,000 roles (about 13%) in the fiscal year that ended May 2026

Revenue and profit beat estimates

Total revenue came in at about $19.3 billion, up 30% from a year earlier and ahead of the roughly $19.1 billion analysts had expected. Adjusted earnings — a measure that strips out certain one-time and non-cash costs — were $1.92 per share, well above the roughly $1.74 analysts had forecast. Under standard accounting rules, Oracle earned $1.56 per share, up 55% from a year earlier, on net income of $4.68 billion — a nearly 60% increase from $2.93 billion in the same quarter last year. Per-share earnings grew more slowly than net income. Oracle also raised $20 billion during the quarter through an at-the-market stock sale.

Cloud revenue more than doubles

The growth is being powered by Oracle’s cloud business, where companies increasingly rent Oracle’s computing power to build and run AI systems. Total cloud revenue rose 62% to about $11.6 billion, and nearly all of that increase came from one place: cloud infrastructure, the raw computing capacity Oracle rents to customers, similar to what Amazon and Microsoft sell through their own cloud units. That revenue more than doubled, up 121% to $7.4 billion. By contrast, cloud applications — Oracle’s more traditional software-subscription business — grew far more slowly, up just 10% to $4.2 billion.

During the quarter, Oracle also:

Delivered more than 300,000 graphics processors to its AI cloud customers
Brought another 850 megawatts of data-center capacity online

Backlog swells on AI contracts

Behind that growth sits Oracle’s contracted backlog. The company’s remaining performance obligations — the total value of contracts customers have already signed but that Oracle has not yet delivered and billed for — reached $664 billion, up $209 billion from a year earlier, with Oracle saying it booked more than $30 billion in new AI cloud contracts during the quarter alone. Oracle’s prior-quarter RPO included a five-year agreement under which OpenAI committed to buy roughly $300 billion of Oracle’s cloud capacity starting in 2027 and requiring roughly 4.5 gigawatts of power capacity; the available reporting does not establish how much of the current $664 billion backlog that deal represents.

Guidance raised for the year

Looking ahead, Oracle raised its guidance for the full fiscal year, now projecting at least $90 billion in total revenue and adjusted earnings of about $8.10 per share, both above what analysts had been expecting before the report. For the current quarter, the company guided to adjusted earnings of $1.85 to $1.93 per share, total revenue growth of 30% to 34%, and cloud revenue growth of roughly 64% to 71%, depending on the currency basis.

Dividend declared

Oracle’s board also declared a quarterly dividend of 50 cents per share on its common stock, payable October 23, 2026, along with a $1.625-per-share dividend on its Mandatory Convertible Preferred Stock payable October 15, 2026.

Spending outpaces cash flow

That growth is not coming cheap. Oracle reported record operating cash flow of $23 billion for the quarter, up 184% from a year earlier, but after accounting for the cost of building out AI data centers, free cash flow was negative — roughly $5 billion in the red, compared with a shortfall of about $362 million in the same quarter last year. Capital spending alone came to $28.5 billion for the quarter, more than triple what Oracle spent in the same period last year, and Oracle maintained full-year fiscal 2027 capital-expenditure guidance of $90 billion to $95 billion, with net cash capex expected not to exceed $70 billion after customer prepayments and financing. Oracle has also taken on significant debt; one report put its debt at about $125 billion. A single report said S&P Global downgraded Oracle’s long-term credit rating to BBB-, one notch above speculative grade, in July 2026, citing debt, negative free cash flow and concentration risk tied to the OpenAI contract; the available reporting did not independently corroborate that action. Those concerns, combined with negative free cash flow, are part of why the stock has come under pressure for much of 2026 even as revenue and profit grew.

Stock under pressure despite the beat

That spending has weighed on the stock for much of 2026. Oracle shares fell sharply in June — including a roughly 11% drop tied to news of an increased capital raise and, later in the month, the stock’s worst week since the 2001 dot-com bust, with shares down roughly 19% that week, as investors grew uneasy about the pace of AI spending and debt. Heading into the September 10 earnings release, Oracle shares were down roughly 22% for the year, a period in which the S&P 500 had gained about 11%. Shares slipped again during the session ahead of the report, then turned higher in after-hours trading once the results were released and investors digested the beat-and-raise report; one CNBC account put the gain at roughly 7%, although the exact size of the move varied across reports.

Job cuts continue

The company also reported workforce reductions during the fiscal year. Oracle’s headcount fell by roughly 21,000 roles, about 13%, during the fiscal year that ended in May 2026 — the latest in a series of cuts that included an earlier round in March 2026 — part of a broader wave of job cuts across large technology companies as they redirect spending toward AI infrastructure.

Timeline

March 2026 — An earlier round of Oracle job cuts was reported
May 2026 — Oracle’s fiscal year ends; headcount for the year is down roughly 21,000 roles (about 13%)
June 2026 — Oracle shares fall roughly 11% on news of an increased capital raise, then post their worst week since the 2001 dot-com bust, down about 19%
August 31, 2026 — Oracle’s fiscal first quarter ends
September 10, 2026 — Oracle reports quarterly results after market close; shares turn higher in after-hours trading
October 15, 2026 — Preferred-stock dividend payable
October 23, 2026 — Common-stock dividend of 50 cents per share payable
October 25-28, 2026 — Oracle AI World conference, Las Vegas
2027 — OpenAI’s five-year, roughly $300 billion cloud-capacity agreement with Oracle is set to begin

What’s next

Investors looking for more detail on Oracle’s AI strategy will get another chance at Oracle AI World, the company’s annual conference, scheduled for October 25-28, 2026, in Las Vegas.