Oracle beat Wall Street’s expectations Thursday night, and the market noticed. The stock was up 5.9% ahead of Friday’s open, bouncing back after a 5.4% drop the session before.
The company posted earnings of $1.92 per share for fiscal Q1 2027, topping the $1.74 consensus estimate. Revenue came in at $19.3 billion, ahead of the $19.13 billion analysts had forecast.
Cloud Services revenue grew 62% on a constant currency basis. Infrastructure-as-a-Service revenue jumped 121% year-over-year, beating expectations and more than doubling growth rates from the prior year.
Oracle added $30 billion in new AI bookings during the quarter. That came from a range of new partners, not just OpenAI.
That detail matters. For most of 2026, Oracle has been seen by investors largely as a way to gain exposure to OpenAI ahead of its anticipated listing. The two companies co-develop data centers under the $500 billion Stargate initiative.
That perception has not been kind to Oracle’s stock price. Going into Thursday’s close, ORCL was down 22% for 2026, weighed down by concerns over the rise of Anthropic as a rival to OpenAI.
KeyBanc analyst Jackson Ader pointed to the diversity of Oracle’s new AI partners as a key positive from the quarter. “Being less dependent on a small number of AI giants was an important positive takeaway,” Ader said.
Management also confirmed that the new contracts require no additional capital raising. That removes one overhang investors had been watching closely.
Oppenheimer reiterated its Outperform rating and $275 price target. The firm noted that Oracle Cloud Infrastructure growth exceeded expectations and that capacity delivery accelerated sharply. It also flagged that infrastructure demand continues to outrun supply.
Guggenheim kept its Buy rating with a $400 price target. JMP Securities maintained Market Outperform with a $285 target. Both cited strong cloud growth as a central reason for their confidence.
Operating income grew strongly in the quarter. Oppenheimer noted Oracle is managing to offset AI-driven gross margin compression through restructuring and a leaner cost base.
One area to watch is cash flow quality. Gross margin compression continues, and cash flow is increasingly reliant on customer prepayments rather than operations.
Oracle held its full-year revenue guidance largely in place despite the Q1 beat. For Q2, the company is guiding Cloud Services growth of between 64% and 70%, above the 65% consensus.
Net-new remaining performance obligations normalized after a large Q4 fiscal 2026. That was expected but worth noting after the outsized figure from last quarter.
The stock’s next catalyst could be Oracle’s AI World event in Las Vegas, expected in late October, where management is expected to update its long-term targets.
Oracle currently trades at a P/E of 26.52 with a PEG ratio of 0.76.
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