Oracle’s (ORCL) first-quarter results for fiscal year 2027 comprehensively exceeded expectations, with strong growth in its cloud business, especially cloud infrastructure, confirming that the company’s strategic transformation into an AI computing power provider is achieving results. The substantial increase in AI cloud contracts and the rapid expansion of GPU delivery capacity demonstrate strong market demand for AI computing power. Although high capital expenditures have temporarily put pressure on free cash flow, the company is sharing costs through multiple financing and cooperation models and has raised its full-year guidance, indicating that its bet on AI data center projects is paying off.
Cloud computing giant Oracle reported better-than-expected first-quarter results for fiscal year 2027. The earnings report showed that the company’s first-quarter revenue rose 30% year over year to $19.35 billion, better than the analyst average estimate of $19.13 billion; adjusted earnings per share were $1.92, better than the analyst average estimate of $1.75. Affected by this news, Oracle rose nearly 4% in after-hours U.S. trading on Thursday.
By business segment, cloud revenue rose 62% year over year to $11.61 billion, a record high. Among this, cloud infrastructure revenue rose 121% year over year to $7.4 billion, better than the analyst average estimate of $7.19 billion; cloud applications revenue rose 10% year over year to $4.2 billion. Oracle attributed the revenue growth to trends including strong performance in its cloud infrastructure business and increased data center capacity.
At the same time, software business revenue fell 3% year over year to $5.55 billion, missing the analyst average estimate of $5.67 billion. Oracle said this reflected customers’ continued migration from on-premises products to cloud products. Hardware business revenue rose 15% year over year to $770 million, and services business revenue rose 5% year over year to $1.41 billion, both better than analyst expectations.
Oracle has now repositioned itself as a computing power provider for the AI computing business and is building data centers on a large scale for OpenAI and other customers. The company said it added 850 megawatts of data center capacity this quarter.
Customer demand for AI cloud training and inference services continues to grow, with growth outpacing supply. Oracle added more than $30 billion in AI cloud contracts in the first quarter, bringing its remaining performance obligations up 4% quarter over quarter to $664 billion, higher than the analyst average estimate of $618 billion. Since the end of the fourth quarter of fiscal year 2026, the company has also delivered more than 300,000 GPUs to its AI cloud customers, with delivery capacity nearly three times that of the fourth quarter of fiscal year 2026.
Oracle co-CEO Clay Magouyrk said: “We are delivering data centers and GPU capacity at a pace that would have seemed impossible just a year ago.”
For the second quarter, Oracle expects revenue to grow 30% to 34% year over year, with adjusted earnings per share of $1.85 to $1.93. For fiscal year 2027, Oracle expects revenue to “reach at least $90 billion” and raised its adjusted earnings per share forecast from $8.05 to $8.10.
