Oracle is scheduled to report its fiscal first-quarter earnings Tuesday, with Wall Street expecting a 30% jump in cloud revenue driven by strong demand for artificial intelligence services. Investors are keenly awaiting details on a reported $30 billion deal with OpenAI.
Shares of the software giant have soared more than 60% over the past year. The company’s strategy has involved securing a massive supply of Nvidia’s highly sought-after graphics processing units (GPUs) and renting that computing power through its Oracle Cloud Infrastructure (OCI) business.
For the quarter ending in August, analysts polled by Bloomberg anticipate adjusted earnings of $1.48 per share on revenue of $15 billion. This would represent a significant increase from the $1.39 earnings per share and $13.3 billion in revenue reported in the same period last year. Sales in the Cloud Services division, Oracle’s largest revenue driver, are projected to reach $7.3 billion.
However, many analysts believe management’s forward-looking commentary will be more influential than the quarterly results. Barclays analyst Raimo Lenschow advised clients that investor focus should be on the additional commentary, particularly concerning the deal announced in June, which sent the stock to a new record. That agreement, widely reported to be with OpenAI, is expected to bring in over $30 billion in annual revenue starting in fiscal year 2028.
Echoing this sentiment, RBC Capital Markets analyst Rishi Jaluria wrote that the stock’s reaction will hinge on “clarity around the incremental contribution from the presumed OpenAI deal, Stargate timing, and OCI growth and profitability.”
Investors will also be listening for updates on the Stargate AI project, a $500 billion AI infrastructure partnership involving Oracle, OpenAI, and SoftBank. It remains unclear how the $30 billion deal relates to the Stargate project or when it will become fully operational. In July, OpenAI said a key Texas data center for the project was “progressing,” but SoftBank noted in August that the initiative was taking longer than expected to launch.
Despite the clear momentum in its AI infrastructure business, questions remain about its long-term profitability. Morgan Stanley analyst Keith Weiss noted that Oracle refrained from reiterating its previous 45% margin target for fiscal year 2026, creating what he called a “key debate” around the margin profile of this new revenue stream.
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