Oracle Reports Upbeat Q1: Should You Tap Oracle With ETFs?

Oracle ORCL shares rose in extended trading on Thursday after the software giant reported better-than-expected fiscal first-quarter results and offered an upbeat outlook for the current quarter.

The company’s growing cloud business, driven by demand for artificial intelligence (AI) infrastructure, continues to support its expansion. However, rising capital spending, mounting debt and negative free cash flow remain key concerns for investors.

Oracle Beats Estimates in Q1

Oracle reported first-quarter fiscal 2027 non-GAAP earnings of $1.92 per share, which beat the Zacks Consensus Estimate by 10.3% and increased 30% in dollar terms and 30% in constant currency (cc) on a year-over-year basis.

Total quarterly revenues increased 30% year over year to $19.3 billion, which beat the consensus mark by 1.11%, reflecting extraordinarily strong demand for Oracle's cloud infrastructure and applications suites, particularly from AI-focused enterprises.

Q2 Outlook Points to Continued Growth

Oracle expects adjusted earnings per share of $1.85 to $1.93 for the fiscal second quarter. Revenue is projected to grow 30% to 34% year over year.

Analysts surveyed by LSEG were expecting adjusted earnings of $1.89 per share and revenue of $21.20 billion, implying 32% growth, as mentioned on CNBC.

For fiscal 2027, Oracle now projects adjusted earnings of $8.10 per share and revenue of at least $90 billion. The outlook is slightly ahead of analyst expectations of $8.07 in earnings and $89.76 billion in revenue.

Chief Financial Officer Hilary Maxson said the company’s full-year capital spending guidance remains unchanged.

Cloud Business Powers Oracle’s Expansion

Oracle’s cloud operations remain central to its AI ambitions. Cloud revenue jumped 62% to $11.61 billion, exceeding the $11.51 billion consensus estimate from StreetAccount, per the same CNBC article.

Cloud infrastructure revenue more than doubled to $7.4 billion, beating the $7.09 billion analyst estimate.

The company is investing heavily in data centers to meet demand from AI customers. During the quarter, Oracle delivered 850 megawatts of data center capacity.

However, its traditional software business was weaker. Revenue from the software category fell about 3% to $5.55 billion, below StreetAccount’s $5.61 billion estimate.

Heavy AI Spending Raises Financial Concerns

Oracle’s AI expansion comes with a steep price tag. Capital expenditures surged to $28.50 billion in the fiscal first quarter from $8.50 billion a year earlier.

The company reported negative free cash flow of $5.4 billion, compared with negative $362 million in the prior-year quarter. Its debt has also climbed to approximately $125 billion.

Oracle’s weaker cash position and lower credit rating compared with major hyperscalers could make financing its data center expansion more challenging.

Despite these concerns, Oracle Chief Executive Officer Clay Magouyrk said the company closed more than $30 billion in additional AI contracts during the quarter without requiring additional capital from Oracle.

Backlog Reaches $664 Billion

Oracle’s remaining performance obligations rose to $664 billion at the end of the quarter, well above StreetAccount’s $630.6 billion consensus estimate, according to the same CNBC article.

This figure includes contracted revenue that has not yet been recognized, along with deferred revenue and uncollected invoices.

The growing backlog highlights strong demand for Oracle’s cloud and AI services and provides visibility into future revenue.

During the quarter, Oracle also introduced AI agents for human resources teams and secured a Pentagon contract worth up to $7 billion over 10 years.

Oracle-Heavy ETFs in Focus

The Oracle stock was down 23% this year and is off 5.8% over the past five days (as of Sept. 11, 2026).  The latest earnings report may help ease concerns about the company’s growth prospects. However, it is to be seen whether Oracle can convert its growing AI contract pipeline into revenues while managing its heavy investment and debt burden.

Investors can gain exposure to the stock through exchange-traded funds (ETFs). Oracle-heavy ETFs include the Janus Henderson Transformational Growth ETF JXX, Founders 100 ETF FFF, OpenAI Lab Ecosystem ETF OAIW and REX FANG & Innovation Equity Premium Income ETF FEPI. Oracle accounts for 6% to 8% of each fund.

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This article originally published on Zacks Investment Research (zacks.com).

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