Oracle stock rises after cloud revenue beat

Oracle’s shares rose about 4% in after-hours trading after the company reported quarterly results that came in ahead of Wall Street’s expectations. The software group also posted a sharp increase in revenue for its fiscal first quarter, which ended Aug. 31, and highlighted continued momentum in its cloud business.

Cloud growth drives the quarter

Total revenue increased almost 30% from a year earlier, while net income climbed to $4.68 billion, or $1.56 a share, from $2.93 billion, or $1.01 a share. Adjusted earnings exclude stock-based compensation expenses. For the current quarter, Oracle guided to adjusted earnings per share of $1.85 to $1.93 and revenue growth of 30% to 34%.

The company’s cloud division was the main engine of the quarter. Cloud revenue jumped 62% to $11.61 billion, and cloud infrastructure revenue more than doubled to $7.4 billion, both above the analyst estimates cited by the company. Oracle said it delivered 850 megawatts of data center capacity during the period, underscoring the scale of its buildout.

Heavy spending and debt remain a concern

The expansion is being driven by data center investment as Oracle tries to secure a larger role in the artificial intelligence market. That strategy has come with a steep cost: capital expenditures surged to $28.50 billion in the quarter, free cash flow was negative $5.4 billion, and the company ended the period with $125 billion of debt. Oracle also has a weaker cash position and lower credit rating than some larger cloud rivals.

For the full fiscal 2027 year, Oracle now expects adjusted earnings of $8.10 per share on at least $90 billion of revenue. The stock has fallen 22% so far this year, even after the latest earnings beat, while the S&P 500 has gained about 11% over the same period. Investors are weighing the strong cloud growth against the company’s heavy spending needs and balance-sheet strain.

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