(Bloomberg/Carmen Reinicke and Ryan Vlastelica) — The pressure is on for Oracle Corp. to deliver another quarter of accelerating revenue growth driven by spending on artificial intelligence after a run-up in its shares this year.
While the software maker’s stock is off its record high from last month, it’s still up more than 40% in 2025, placing Oracle among the 30 best performers in the S&P 500 and adding more than $200 billion in market value. The expansion is being fueled by its cloud infrastructure business, where Oracle projected sales growth would jump to more than 70% in the current fiscal year, sending the stock up 13% the day after its last earnings report in June.
“The main thing I’m looking for in this report is whether the cloud growth sustains itself,” said Paul Meeks, managing director at Freedom Capital Markets, adding that following last quarter’s surprise, he doesn’t expect another. “Oracle has already proven that its cloud business is benefiting from AI, but now it needs to reconfirm it.”
After years of sluggish revenue growth, Oracle is in the midst of a boom thanks to a race for AI computing power that’s sent sales in its cloud infrastructure unit soaring. The company’s fiscal first-quarter earnings report on Tuesday afternoon is expected to show that overall sales expanded 13%, the fastest clip in more than two years, according to the average of analyst estimates compiled by Bloomberg. Cloud infrastructure sales are projected to rise 56% from the same period last year.
Total revenue growth is expected to accelerate for three of the following four quarters, reaching 17% in its current fiscal year and 20% in fiscal 2027, compared with an average of about 4% over the past decade.
There have been signs suggesting Oracle’s growth outlook likely remains intact. Reports from Microsoft Corp. and CoreWeave Inc. showed accelerating demand for AI infrastructure, which bodes well for Oracle, according to Bloomberg Intelligence analyst Anurag Rana.
The results will land in a market that has seen investors continue to reward the stocks of companies able to show strong growth fueled by AI. Miss those lofty expectations, though, and the comeuppance is swift and harsh.
Microsoft’s outlook for growth in its cloud-computing business in July helped send its shares to a record high, while Salesforce Inc. shares dropped as much as 8.5% on Thursday after its results showed its AI products aren’t paying off as quickly as investors hoped.
Even if Oracle meets Wall Street’s lofty expectations, a repeat of its big stock jump last quarter is unlikely, according to Randy Hare, portfolio manager at Huntington National Bank.
“Investors are getting a good handle on the AI growth numbers for most of the AI companies. So the huge surprises are probably behind us now,” said Hare, whose firm holds Oracle shares.
The Nasdaq 100 is priced at roughly 27 times earnings projected over the next 12 months, around the highest since late 2021. Oracle trades at 33 times forward earnings, nearly twice the stock’s average over the past decade and up from 25 times at the start of the year.
Showing sustained growth and a solid forecast is key to upside in the stock. In June, Oracle said it signed a single cloud deal worth $30 billion in annual revenue, which is expected to start flowing in fiscal year 2028. Bloomberg News reported in July that OpenAI had agreed to rent additional computing power from Oracle’s data centers.
“We want to see how well any platform is incorporating AI,” said Keith Kirkpatrick, research director at Futurum Group. “This is something it has to show progress on in the coming quarters.”
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Earnings Due Tuesday
- Earnings Postmarket:
- Methode Electronics Inc. (MEI US)
- Oracle Corp. (ORCL US)
- Synopsys Inc. (SNPS US)
–With assistance from Subrat Patnaik and David Watkins.
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