TLDR
- Oracle reports Q1 fiscal earnings after market close on September 10, with options traders pricing in an 11.2% price move.
- Wall Street expects quarterly revenue of $19.13 billion, up 28% year-over-year, with EPS of $1.74.
- Oracle’s order backlog stands at $638 billion, roughly 9.5 times its total fiscal 2026 revenue.
- Cloud infrastructure sales jumped 93% last quarter, but free cash flow fell to negative $23.7 billion due to heavy data center spending.
- Morgan Stanley raised its price target to $210, while Bank of America holds a Buy rating with a $240 target.
Oracle stock is trading near $157.62 heading into its September 10 earnings report, down 19% this year. Options traders are pricing in a move of around 11.2% in either direction after results drop.
Wall Street expects quarterly sales of $19.13 billion, up nearly 28% from a year ago. EPS is forecast at $1.74.
Morgan Stanley analyst Sanjit Singh sees an “attractive tactical setup” ahead of the print. He believes Oracle could report cloud revenue growth of 63% year-over-year, toward the high end of the 58% to 65% range management guided to.
Singh points to Oracle’s GPU-as-a-service business as a key growth driver. That segment rents out computing power from graphics processing units as a cloud service.
Pricing trends in AI infrastructure also look favorable. CoreWeave and Nebius Group both recently gave upbeat commentary on AI infrastructure pricing. Singh says those signals suggest Oracle could benefit from strong demand pushing prices higher.
Oracle’s deferred revenue growth has also outpaced reported revenue in its cloud applications segment for two straight quarters. That points to a backlog of revenue still to be recognized.
The Backlog Story
Oracle holds $638 billion in locked-in orders. That is roughly 9.5 times its $67.4 billion in revenue from fiscal 2026. Cloud infrastructure sales surged 93% last quarter.
The challenge now is turning those orders into cash fast enough. Investors want proof that Oracle can deliver hardware quickly without forcing another round of massive spending.
Oracle generated $32 billion in operating cash flow last year, but heavy data center investment pushed free cash flow to negative $23.7 billion. The company also plans to raise roughly $40 billion in fiscal 2027 to keep expanding its infrastructure network.
Piper Sandler analyst Billy Fitzsimmons flagged the AI spending as an ongoing concern. He does see potential upside for Oracle Cloud Infrastructure revenue, as well as for its software-as-a-service business. He also noted that NetSuite bookings accelerated late in Q4, and that Cerner is returning to growth.
OpenAI Ties Add Another Layer
Oracle stock has also moved on OpenAI news this year. OpenAI signed a $300 billion cloud rental deal with Oracle last year, tying the two companies closely together.
When OpenAI released its GPT-6 “Astra” model recently, it provided a boost to ORCL. Following that update, Singh raised his price target from $207 to $210.
Bank of America analyst Tal Liani kept a Buy rating with a $240 price target.
Wall Street overall carries a Strong Buy consensus on ORCL, based on 28 Buy ratings and four Hold ratings over the past three months. The average 12-month price target sits at $254.68, implying about 60% upside from current levels.
Oracle stock was up 3.1% on Friday ahead of the report.
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