The artificial intelligence wave has positioned Oracle as the key AI infrastructure development player. This apparent position overshadowed the company’s poor earnings report for Q1 2026, which was released on September 9.
The stock soared over 30% following the earnings due to the remaining performance obligation (RPO) increasing 359% to $455 billion.
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Revenue $14.9 billion, up 12% in USD and up 11% in constant currency.
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Net income was $2.927 billion, slightly lower compared to $2.929 billion in Q1 2025.
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Earnings per share down(EPS) 2% to $1.01 year-over-year.
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EPS was $0.01 lower than the consensus estimates.
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Free cash flow decreased 152% YoY to negative $5.9 billion.
Following the earnings report, Bank of America analysts Brad Sills and Matt Bullock changed Oracle’s rating from neutral to buy and raised their price target for (ORCL) stock from $295 to $368. They said their bullish view of Oracle is based on accelerating demand in the company’s Oracle cloud infrastructure segment.
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Severe downturn in enterprise software spending
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Currency headwinds
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Issues with the integration of past acquisitions
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Database competition from IBM, Amazon, and Microsoft
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Apps competition from SAP, Microsoft, and others
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The development of viable open source database and middleware alternatives
Veteran analyst Stephen Guilfoyle expressed a different opinion, noticing that with RPO at $455 billion, deferred revenue for the coming twelve months (current) is only $12.098 billion, and that there was no entry in the report for non-current deferred revenue.
Guilfoyle wrote for TheStreet Pro:
ORCL is fast approaching “strong sell” territory.
It turned out that most of that RPO is a $300 billion deal with OpenAI. Following that revelation, Moody’s expressed concerns.
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“Moody’s raised a major red flag on Oracle’s much-touted $300 billion AI infrastructure deal with OpenAI. Though the contract marks the largest in Oracle’s history, analysts at the firm believe that the concentration puts outsized financial pressure on the company if OpenAI stumbles,” writes Moz Farooque for TheStreet.
On September 22, Oracle promoted Clay Magouyrk and Mike Sicilia to CEOs. Former CEO Safra Catz has been appointed executive vice chair of the Oracle board of directors.
Oracle submitted a filing to the SEC on September 24, revealing that it sold bonds for $18 billion.
