Jim Cramer Turns “More Bullish” on Oracle (ORCL)

On September 11, Jim Cramer said Oracle Corporation's (NYSE: ORCL ) latest quarter gave him "whiplash" as the stock erased an early gain, but the Mad Money host came away more bullish on the company's artificial intelligence buildout. He pointed to Oracle's 121% jump in cloud infrastructure revenue and $664 billion remaining performance obligation as evidence that AI demand is translating into contracted business, while customer prepayments are helping reduce the cash burden of its expansion.

Oracle's fiscal first-quarter 2027 revenue rose 30% year over year to $19.3 billion, while total cloud revenue increased 62% to $11.61 billion. Cloud infrastructure revenue reached $7.4 billion, and Oracle delivered 850 megawatts of additional data-center capacity and more than 300,000 GPUs. RPO increased $209 billion from a year earlier to $664 billion. The stock initially jumped after the results but closed September 11 down 1.74% at $150.28, which points to continued investor concerns about the cost of the AI expansion.

Cramer Sees a More Manageable AI Buildout

Cramer's bullish argument is about Oracle Corporation's (NYSE:ORCL) ability to convert its enormous backlog into revenue without funding the entire infrastructure buildout itself. The company booked more than $30 billion of additional AI cloud contracts during the quarter, lifting RPO to $664 billion. Management expects roughly half of the RPO to convert into revenue over the next 36 months. Cramer said, "The scale of the opportunity here has changed dramatically."

The financing picture also improved. The company reported $28.499 billion of capital expenditures but received $11.363 billion of customer prepayments with a significant financing component. Its supplemental calculation put net cash outlay for CapEx at $17.966 billion. Oracle also completed its previously announced $20 billion at-the-market equity offering. The company expects fiscal 2027 revenue of at least $90 billion and non-GAAP EPS of $8.10. For the current quarter, it expects revenue growth of 30% to 34% and cloud-revenue growth of 65% to 71%.

Cramer also made clear why investors remain skeptical. He said, "The bears still have plenty of ammunition," as he pointed to Oracle Corporation's (NYSE:ORCL) cash burn, capital requirements, and dependence on major AI customers. The company generated $23.1 billion of operating cash flow in the quarter, but free cash flow remained negative at $5.4 billion after $28.499 billion of CapEx. Management expects $90 billion to $95 billion of gross CapEx for fiscal 2027 but no more than $70 billion of net cash CapEx after financing offsets, and has not provided a timetable for returning to positive free cash flow. Margin pressure adds another concern. The company needs its rapidly expanding cloud business to generate enough incremental profit and cash flow to justify the scale of its investment.