Oracle's fiscal first-quarter earnings update showed customer prepayments helping to reduce its cash burn, but Wall Street remains split on whether the stock belongs among the top tier of AI infrastructure investments.
Revenue rose 30% to $19.3 billion, above the $19.14 billion consensus, while adjusted earnings of $1.92 per share beat the $1.74 estimate. Free cash flow was negative $5.40 billion, significantly better than the $9.56 billion shortfall analysts had expected and less severe than the $11.48 billion negative free cash flow Oracle posted in the third quarter of fiscal 2026.
Oracle said customers prepaid about $11.36 billion of its $28.50 billion in quarterly capital expenditure. Cloud infrastructure revenue jumped 121% to $7.39 billion. Remaining performance obligations reached $664 billion after Oracle booked more than $30 billion in additional AI cloud contracts. Chief Financial Officer Hilary Maxson said most new contracts used pre-pay or bring-your-own-hardware structures, so they won't require incremental capital from Oracle.
Jefferies analyst Brent Thill kept a Buy rating and a $290 price target, noting that remaining performance obligations rose 46% year over year and arguing that Oracle could be worth $400 longer term if management meets its $20 per share earnings power target. Still, he placed Oracle in the tier 2 group among cloud infrastructure providers, ranking Microsoft, Amazon, and Alphabet ahead because of stronger balance sheets, better core business multiples, and deeper market penetration.
Oracle shares rose 4% after hours, but remain down more than 21% year to date. S&P Global cut Oracle's credit rating in July, Moody's has flagged Oracle and CoreWeave for elevated credit risk among AI infrastructure spenders, and Oracle carries about $125 billion in debt. The company maintained its full-year reported capital expenditure guidance of $90 billion to $95 billion.
