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A recent earnings report has triggered significant investor enthusiasm in Oracle, a well-established technology company renowned for its database solutions.
During the previous month, Oracle’s shares experienced notable growth, fueled by an impressive earnings announcement that highlighted a surge in demand for its cloud infrastructure services, a trend largely driven by the ongoing expansion of artificial intelligence (AI) technologies.
Data from S&P Global Market Intelligence indicates that the stock increased by 21% following the positive report. The upward trajectory began after the earnings announcement on September 9 and continued throughout the month.
Oracle’s Resurgence
While several AI-focused companies have garnered substantial attention recently, Oracle’s growth in the cloud sector has been noteworthy. The company is reportedly outpacing major players like Microsoft and Amazon in this competitive landscape.
The fiscal first quarter saw Oracle’s total revenue rise by 7% to reach $13.3 billion. Although this increase was primarily attributed to a decline in hardware and service revenue, it exceeded the expected figure of $13.23 billion. More significantly, the revenue generated from its cloud infrastructure surged by 45% to $2.2 billion, and the cloud applications segment also demonstrated solid growth, increasing by 10% to match that amount.
Oracle’s cloud services have now become its primary revenue driver, signaling a strategic shift away from traditional licensing and support models. To accommodate the rapid rise in demand, the company is aggressively expanding its network of data centers.
Chairman Larry Ellison reported that Oracle currently operates or has under construction a total of 162 cloud data centers. Furthermore, the company secured 42 contracts for cloud graphics processing units (GPUs), valued at approximately $3 billion. Notably, the remaining performance obligations (RPO), an indicator of future revenue, rose by 53% to $99 billion.
On the earnings front, Oracle delivered positive results with adjusted earnings per share climbing by 17% to $1.39, surpassing analyst expectations of $1.32.
Future Outlook for Oracle
Oracle’s future projections are also encouraging, with management forecasting a fiscal second-quarter revenue increase of 7%-9% alongside an anticipated cloud revenue growth rate of 23%-25%. For the upcoming quarter, the forecast for adjusted earnings per share is set between $1.45 and $1.49, aligning with analyst estimates of $1.47. The company expects a momentum shift in the latter half of the fiscal year, projecting double-digit revenue growth overall and an acceleration in cloud infrastructure expansion compared to the prior year.
When compared to its tech industry counterparts, Oracle’s stock appears relatively well-priced, positioning the company favorably to leverage the burgeoning demand for data centers crucial for running AI applications.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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