Oracle shares rose 3% Friday after gaining nearly 7% after hours Thursday

Oracle (NYSE: ORCL) shares are rallying Friday after investors got new numbers on its cloud business, AI contracts and revenue backlog.

The stock rose 3% in early trading after gaining nearly 7% after hours Thursday. Oracle beat Wall Street forecasts for its fiscal first quarter, while a $26 billion increase in backlog eased some concern around the amount of money it is spending on AI infrastructure.

The revenue of Oracle reached $19.35 billion, which is about 30% higher than what was observed in the previous year, whereas adjusted profits increased by 30% to reach $1.92 per share.

The revenue from the cloud business increased by 62%, reaching $11.61 billion, while the cloud infrastructure saw its sales soar by 121%. In addition, Oracle added up another 850 megawatts to the data center capacity during the quarter.

Oracle adds AI contracts as cloud infrastructure revenue climbs 121%

The company had booked around $664 billion worth of remaining performance obligations at the end of the quarter, which is contracted revenue not yet booked by the firm. The figure was up by $209 billion from last year. In addition to that, the company secured AI cloud contracts worth more than $30 billion.

According to the financial report issued by the company, “the customer demand for AI Cloud Training and Inferencing Services continues to outpace supply.” Oracle expects to generate at least $90 billion in total fiscal 2027 revenue.

Deutsche Bank (NYSE: DB) maintained its Buy rating on Oracle and price target of $300. It added that the new AI contracts were pre-paid as well as bring your own hardware deals that apparently won’t require any additional investment from Oracle’s side. It further pointed out that the company completed its $20 billion at-the-market equity program.

Morgan Stanley (NYSE: MS) maintained Equal Weight with a target price of $210, citing that:

“Oracle’s 1Q delivered a near-term proof point on [IaaS] execution, as Cloud Infrastructure grew 121%.”

Citi (NYSE: C) kept Buy with a $330 target and maintained its Positive Catalyst Watch. The bank said, “Given the magnitude of FQ1 outperformance, we see a favorable setup for upward revisions at Investor Day and AI World.” Its target is based on roughly 30 times fiscal 2028 earnings and slightly higher estimates.

Bernstein maintained Outperform and a $325 target. The firm cited higher revenue, a larger contract book, margins and the raised fiscal 2027 outlook. It rolled its estimates forward but cut the earnings multiple in its model to 23.5 times from 24.5 times after software valuations moved lower.

Wall Street keeps higher targets while funding and margins stay under review

Wells Fargo (NYSE: WFC) kept Overweight with a $280 target. The bank said Oracle can bring in new contracted work and growth opportunities without automatically adding another cash outflow. It also said management remained confident in its fiscal-year targets without making a large increase to guidance. Wells Fargo listed A-day as the next catalyst.

Barclays (NYSE: BCS) stayed at Overweight with a $252 target. The bank pointed to annual growth reaching 30% from 21% in the first quarter comparison. It also said Oracle’s funding position improved after completion of the $20 billion equity raise, while management addressed questions about delays and margins.

UBS (NYSE: UBS) maintained Buy with a $250 price target, noting that the after-hours performance of the stock was driven by better-than-expected revenues and profits, faster cloud infrastructure growth, and a successful equity sale. The negative factor was the unchanged forecast for Oracle’s fiscal 2027 revenues. UBS said that AI-driven growth has shifted to 30% from 11% one year ago.

Bank of America (NYSE: BAC) maintained Buy with a $240 price target. The bank based its rating decision on the faster adoption of Oracle Cloud Infrastructure. However, Bank of America also noted limited visibility into Oracle’s profitability and return on capital investment, despite the growth in OCI revenues, which indicates significantly higher demand.

JPMorgan (NYSE: JPM) maintained Overweight and set a December 2027 target of $200, replacing its previous December 2026 target of $210. The bank expects higher revenues from additional capacity to drive higher profit growth amid similar margins. At the same time, JPMorgan sees potential for a narrowing of Oracle’s discount to its peers’ valuations.

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