Oracle's quarterly revenue beats estimates as AI boom drives cloud demand

Sept 10 : Oracle topped Wall Street expectations for first-quarter revenue on Thursday and lifted its annual profit forecast, boosted by strong demand for its cloud computing services from surging enterprise spending on AI.

Shares of the company, which have fallen more than 20 per cent this year, rose nearly 6 per cent in extended trading.

The upbeat report indicates that Oracle's heavy investment in data centers is bearing fruit, helping it secure more enterprise contracts.

Oracle's revenue backlog stood at $664 billion at the end of the first fiscal quarter, up from $638 billion in the prior three months, while analysts estimated $639.89 billion, according to data from Visible Alpha.

Oracle's stock has taken a beating this year on growing investor concerns over soaring capital expenditure that has pressured its free cash flow. In July, S&P Global downgraded Oracle's credit rating citing weak cash flow and rising business risk.

Investors have also been worried about Oracle's Stargate project amid reported build-out delays tied to labor, permitting approvals and power availability.

Still, analysts expect Oracle's revenue to accelerate sharply as it expands its data center footprint. The company said it brought 850 megawatts of capacity online in the June-August quarter.

The company's heavy spending has helped it break into a market dominated by the largest tech companies, such as Amazon, Microsoft and Alphabet's Google.

Oracle's first-quarter revenue rose 30 per cent to $19.3 billion, compared with analysts' average estimate of $19.14 billion, according to data compiled by LSEG.

The company expects adjusted earnings per share of $8.10 for fiscal 2027, compared with its prior forecast of $8.05. Analysts on average expect annual profit of $8.07 per share. It forecast revenue of at least $90 billion for fiscal 2027.

For the second quarter, Oracle expects a 30 per cent to 34 per cent jump in revenue, and adjusted profit between $1.85 and $1.93 per share, both in line with market expectations.