Shares of Oracle (ORCL) rose over 22% in after-hours trading. The upside came despite the artificial intelligence (AI) infrastructure company reporting lower-than-expected results for its first quarter of Fiscal Year 2026. Investors’ optimism stemmed from ORCL’s bullish outlook for cloud infrastructure revenue, which helped reassure them about the company’s future growth.
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Earnings per share climbed 6% year-over-year to $1.47, but came just below analysts’ consensus estimate of $1.48 per share. Further, sales increased by 11% year-over-year to $14.9 billion. This also missed analysts’ expectations of $15.04 billion.
However, one standout figure was a 359% surge in remaining performance obligations (RPO) to $455 billion, signaling strong demand for Oracle’s cloud infrastructure. CEO Safra Catz attributed the growth to four multi-billion-dollar contracts signed in Q1.
Importantly, she added that several more such deals are expected in the coming months, likely pushing RPO beyond “half a trillion dollars.”
Cloud Momentum Surges
During the first quarter, Cloud segment’s revenue soared 28% to $7.2 billion, now accounting for about 48% of Oracle’s total sales.
Further, Chairman and CTO Larry Ellison highlighted Oracle’s 1,529% growth in MultiCloud database revenue, driven by partnerships with Amazon (AMZN), Google (GOOGL), and Microsoft (MSFT).
Outlook
The scale of Oracle’s Cloud growth has prompted the company to revise its outlook upward. In this regard, Catz is expected to present a new financial plan at next month’s Financial Analyst Meeting.
At present, ORCL now expects its Fiscal 2026 OCI revenue to hit $18 billion in Fiscal 2026, reflecting a 77% jump. This is higher than the earlier forecast of 70% growth.
Also, the revenue is expected to climb to $32 billion, $73 billion, $114 billion, and $144 billion over the next four years. Interestingly, CEO mentioned that most of this projected revenue is already booked in Oracle’s reported RPO.
Is Oracle a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 23 Buys and 12 Holds assigned in the past three months. Further, the average ORCL price target of $257.90 per share implies 6.77% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
