This Cloud/AI Stock Had a “Historic” Q1
Despite missing estimates, Oracle is surging after its Q1 2026 earnings. Can optimistic guidance keep the rally going?
Key Takeaways
One analyst called Oracle’s Q1 2026 earnings a “historic print”, driven by a 359% year-over-year jump in its remaining performance obligations.
Despite missing revenue and EPS estimates, Oracle delivered its strongest quarterly growth since 2023.
The company issued “stunning” multi-year guidance, projecting cloud infrastructure revenue will grow from $18bn in fiscal 2026 to $144bn by 2030.
Oracle [ORCL] is a cloud and database infrastructure giant that has been repositioning itself as an artificial intelligence (AI) player.
According to data from Synergy Research Group, shared with CRN, Oracle is the fifth-biggest player in the cloud market. Its Q2 share of 3% trailed Alibaba’s [BABA] 4%, but was dwarfed by Alphabet’s [GOOGL] Google’s 13%, Microsoft’s [MSFT] 20% and Amazon’s [AMZN] AWS’ 30%.[1]
In this article, we look at Oracle’s Q1 2026 earnings, which were reported after the bell on September 9.
Oracle Ramps AI Investments
Ahead of the Q1 earnings, reports emerged last week that Oracle has cut hundreds of cloud infrastructure jobs to redirect resources toward AI expansion. Jobs affected are said to be in Canada, India and the US.[2]
At the same time, Oracle has been aggressively investing in AI data centers. On top of a $3bn being pledged to AI and cloud interests in Germany and the Netherlands, Oracle signed a $30bn-a-year cloud deal with OpenAI’s Stargate project in July, although did not disclose the name of the partner at the time.[3] Part of the tie-up will see Sam Altman’s company lease 4.5GW of data capacity from Oracle.[4]
ORCL Stock’s Monster Move Post Q1 Earnings
As of September 9, the Oracle share price had risen 46.11% year-to-date and gained 56.54% in the past six months.
ORCL stock had pulled back slightly from its all-time high of $260.87 set on July 31 to close 7.42% lower at $241.51 on September 9.
The question heading into Q1 earnings was whether the hype around ORCL stock had fizzled out or whether the share price was taking a breather.
ORCL stock surged more than 27% to a new record high post-market on September 9, although retreated following the earnings call.
Guidance Wows ORCL Stock Investors
The top-line news was underwhelming. Revenue of $14.93bn was lower than analysts’ consensus of $15.04bn, while EPS came in $1.47, slightly lower than the $1.48 consensus.[5]
Nevertheless, revenue was up approximately 12% year-over-year, marking the strongest quarterly growth since Q4 2023.[6]
Cloud infrastructure revenue rose 55%, while multi-cloud database revenue from hyperscalers Amazon, Google and Microsoft soared by what was — in Oracle founder and Chief Technology Officer Larry Ellison’s own words — the “incredible rate” of 1,529%.
“We expect multi-cloud revenue to grow substantially every quarter for several years,” he added in the earnings release.[7]
Even more impressive was Oracle’s guidance. Cloud infrastructure is expected to increase 77% in fiscal 2026 to $18bn. The company also took the unprecedented step of giving a multi-year outlook: the segment is forecast to bring in $32bn, $73bn, $114bn and $144bn in fiscal years 2027–30.[8]
Ben Reitzes, Head of Technology Research at Melius Research, described the guidance to CNBC as “stunning” and called the overall earnings “a historic print”. He believes investors may look back a year from now and remember where they were when the results came in.
Here is how Oracle’s fundamentals currently compare to those of cloud competitors Amazon and Alphabet.
Oracle’s forward fundamentals have skyrocketed following the Q1 report. Thus, despite the company’s bullish cloud outlook, ORCL stock could be considered overvalued compared to both AMZN stock and GOOGL stock.
ORCL Stock: The Investment Case
The Bull Case for ORCL Stock
One of the reasons why ORCL popped following the Q1 earnings was its AI-fueled backlog, or remaining performance obligations (RPO), which soared 359% year-over-year to $455bn, up from $138bn at the end of May. Ellison said in the Q1 release that he expects RPO to exceed $500bn over the next few months.
Investors could be interpreting this as a sign that AI demand is not going anywhere, and that Oracle is going to be at the heart of it, providing businesses with the capacity to help them realize their AI ambitions. Oracle’s capital expenditure for fiscal 2026 is expected to be $35bn, up from $21.2bn in fiscal 2025.
“The vast majority of our [capital expenditure] investments are for revenue-generating equipment that is going into the data centers and not for land or buildings. As we bring more capacity online, we will convert the large RPO backlog into accelerating revenue and profit growth,” said Oracle CEO Safra Catz on the earnings call.[9]
The Bear Case for ORCL Stock
Oracle’s hefty spending could put profitability in focus. Investors may have to keep an eye on margins in the quarters ahead.
In the short term, the trillion-dollar question is whether ORCL stock can maintain its momentum, or whether the share price gains will fade once the post-earnings dust settles.
Conclusion
Oracle’s monster move following the Q1 report could be a major indicator that AI momentum is not slowing down. The company’s aggressive investment in cloud infrastructure should continue to drive revenue and backlog numbers, but ORCL stock could pull back in the near term after smashing through its all-time high.
This is for informational purposes only. OPTO Markets does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.
[1] https://www.crn.com/news/cloud/2025/cloud-market-share-q2-2025-microsoft-dips-aws-still-kingpin
[2] https://www.datacenterdynamics.com/en/news/oracle-layoffs-job-cuts-india-us-oci/
[3] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001341439/e5ccb653-2eb9-4575-8668-2e7064be760b.pdf + https://www.bloomberg.com/news/articles/2025-06-30/oracle-signed-cloud-services-deal-worth-30-billion-a-year
[4] https://openai.com/index/stargate-advances-with-partnership-with-oracle/
[5] https://www.cnbc.com/2025/09/09/oracle-orcl-q1-earnings-report-2026.html
[6] https://stockanalysis.com/stocks/orcl/revenue/
[7] https://investor.oracle.com/investor-news/news-details/2025/Oracle-Announces-Fiscal-Year-2026-First-Quarter-Financial-Results/default.aspx
[8] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001341439/4775e122-e1cc-42a2-9ea4-ec0796584982.pdf
[9] https://uk.investing.com/news/transcripts/earnings-call-transcript-oracle-q1-2025-sees-mixed-earnings-stock-rises-93CH-4257224