Oracle Surprises With Record Order Backlog: AI Cloud Drives 30% Growth

The U.S. software and cloud group Oracle (ISIN: US68389X1050) clearly outpaced Wall Street expectations with its figures for the first quarter of fiscal 2027. Strongly accelerated growth in the cloud segment, as well as a sharp increase in remaining performance obligations, underscore the persistently high demand for computing capacity for artificial intelligence. For private investors, the quarterly report provides important insights into the company’s sustainable transformation and the financing of the enormous investment requirements.

Revenue and profit beat analyst estimates

In the first fiscal quarter ended August 31, 2026, Oracle increased total revenue by 30 percent year on year to $19.35 billion. The company therefore performed better than the market consensus, which had been around $19.14 billion beforehand. For the first time in the company’s history, revenue in the opening quarter was also higher than in the previous fourth quarter. Adjusted earnings per share (non-GAAP EPS) rose by 30 percent to $1.92 and clearly exceeded analysts’ average estimate of $1.74.

Cloud infrastructure as the growth engine

The main driver of the dynamic development remains the cloud infrastructure segment (Oracle Cloud Infrastructure, OCI). OCI revenue climbed 121 percent in the reporting quarter to $7.4 billion. Within this segment, the business with CPU and GPU infrastructure for AI applications even rose by 151 percent to $6.5 billion. Total cloud revenue including software-as-a-service (SaaS) amounted to $11.6 billion (+62 percent). By contrast, the traditional license business (on-premises) shrank as expected by 3 percent to $5.5 billion, as customers increasingly migrate to the cloud.

Backlog rises to $664 billion

Market participants paid particularly close attention to the development of remaining performance obligations (RPO). This figure jumped by $209 billion year on year to a record $664 billion, thus noticeably exceeding market expectations of around $630 billion to $640 billion. In the first quarter alone, new AI cloud contracts totaling more than $30 billion were signed. According to management, around 50 percent of the total RPO balance is expected to be converted into revenue within the next 36 months.

Wave of investment and cash flow financing

To meet the enormous capacity requirements, Oracle invested heavily in the first quarter: capital expenditures (CapEx) rose to $28.5 billion, after having stood at $8.5 billion in the prior-year period. During the same period, 850 megawatts of additional data center capacity were brought online and more than 300,000 GPUs were delivered to customers. Despite the high spending, free cash flow at minus $5.4 billion was less negative than the market had feared. A key reason for this is customer prepayments of around $11.36 billion, which cushioned the operating cash outflow.

Forecast raised: confidence for the full year

Given the high order backlog, management is optimistic about the coming quarters. For the second quarter of fiscal 2027, Oracle expects revenue growth of 30 to 34 percent and adjusted earnings per share between $1.85 and $1.93. The forecast for the full fiscal year 2027 was also raised: total revenue is now expected to rise to at least $90 billion (+34 percent versus the previous year), while adjusted EPS is now targeted at $8.10.

For private investors, Oracle’s quarterly report shows that the group is further consolidating its role as one of the leading AI infrastructure providers. The combination of strong cloud growth and a record backlog offers high earnings visibility. What remains to be seen, however, is how quickly the high RPO balance is converted into actual revenue and whether the customer prepayment model will continue to sufficiently offset the heavy CapEx burden.