Oracle (ORCL) is planning to report first quarter revenue after Tuesday's bell. Wall Street expects a 30% jump in cloud business revenue driven by AI. Investors also take a closer look at the company's $30 billion deal, according to a report with Openai.
The software giant's stock has skyrocketed over 60% over the past year. Stocks were less than 1% ahead of the earnings report.
The company secures a huge amount of Nvidia's coveted GPUs (graphic processing units, or AI chips) and rents its computing power through the OCI cloud business.
Analysts expect revenue from the company's biggest revenue driver, the cloud services business, to $7.3 billion in the first quarter.
For the quarter that ended in August, analysts voted by Bloomberg are hoping the company will report adjusted earnings per share of $1.48 and $15 billion in revenue. That's ahead of earnings of $1.39 per share and previous year's quarterly revenue of $13.3 billion.
However, Barclays (Barc.L) analyst Raimo Lenschow wrote a note to his client on Monday.[s] More attention should be paid to additional commentary from the administrator, not the quarter itself. “He pointed to Oracle's announcement in June, showing that it is expected to generate more than $30 billion in annual revenue for fiscal year 2028, sending stocks to new records, and multiple media outlets are reporting to customers.
Other analysts also highlighted the importance of the transaction as written by RBC Capital Market analyst Rishi Jallia.[T]His stock response lies on the clarity of the estimated Openai trading, Stargate timing, and progressive contributions from OCI growth and profitability. ”
Investors will also hear more about the Stargate AI Project, a $500 billion AI infrastructure deal between Oracle, Open and SoftBank (SFTBY), announced at the White House in June by Trump, Oracle, Oracle Chairman Larry Ellison, Open Chief Sam Altman and SoftBank CEO Masayos Son.
It is unclear how many of the $30 billion deals with Openai will be represented by Stargate, or when the project will come online. Openai in July stated its partnership with Oracle to launch a data center in Abilene, Texas, running “over 2 million chips” as part of Stargate is “ongoing” and some of the facilities are already “up” However, SoftBank in August said it would take longer than expected to let Stargate go off the ground.
However, questions remain as to whether Oracle can continue to make profitable rides with AI Wave.
“While the substantial momentum within Oracle's emerging AI infrastructure business is clear, this fundamental margin profile for incremental revenue remains an important debate,” wrote Morgan Stanley (MS) analyst Keith Weiss, who said the last quarter had refrained from repeating its 45% margin target before 2026 fiscal year.
