Oracle (ORCL): Oracle Has the Backlog. Wall Street Wants the Cash

On September 10, 2026, Oracle Corporation (NYSE:ORCL) reported first-quarter fiscal 2027 results that beat Wall Street estimates on both revenue and earnings. Revenue rose 30% to $19.3 billion, above the $19.14 billion analysts expected, and non-GAAP earnings per share came in at $1.92 versus a $1.74 estimate. Cloud revenue jumped 62% to $11.6 billion, with cloud infrastructure growing 121%.

Oracle Corporation (NYSE:ORCL) shares rose as much as 7.8% the next day before closing about 2% lower, highlighting investor concerns that a recovery in cash flow remains some way off.

Oracle Corporation (NYSE:ORCL) booked more than $30 billion in new AI cloud contracts during the quarter, pushing remaining performance obligations to $664 billion, ahead of the $639.89 billion analysts had modeled. Management said it expects about half of that backlog to convert into revenue within 36 months. Free cash flow came in negative $5.40 billion, better than the negative $9.56 billion analysts had projected, partly because $11.36 billion of the quarter's $28.50 billion in capital spending was covered by customer prepayments.

Barclays raised its price target to $252 from $250 on September 11, 2026, and kept an Overweight rating, saying Oracle's funding setup looks better following the completed $20 billion at-the-market equity raise. UBS lifted its target to $250 from $245 the same day, keeping a Buy rating and citing AI bending Oracle's growth curve higher. Guggenheim reiterated a Buy rating and $400 price target, with analyst John DiFucci pointing to a significant increase in infrastructure-as-a-service revenue during the quarter. DA Davidson also reiterated its Buy rating and price target of $225.

The results did little to ease concerns over margins. BMO Capital's Keith Bachman cut the firm's price target to $195 from $220 on September 11, 2026, keeping an Outperform rating but flagging the sequential decline in gross margin and softer SaaS growth. RBC Capital lowered its target to $165 from $190, keeping a Sector Perform rating and citing leaner margins tied to Oracle's capital-intensive buildout. Stifel's Brad Reback trimmed the firm's target to $200 from $220 despite keeping a Buy rating, citing lower near-term gross margins.

Non-GAAP gross margin fell to 61.0%, down about 770 basis points year over year. Oracle Corporation (NYSE:ORCL) also disclosed an additional $700 million in restructuring costs tied partly to AI adoption, bringing its fiscal 2026 restructuring plan to roughly $2.8 billion. Management has described fiscal 2027 and 2028 to be peak capital expenditure years. For fiscal 2027, Oracle continues to expect $90 billion to $95 billion in capital expenditures, with no firm timetable for positive free cash flow.