oracle defies earnings miss with massive rpo growth
redwood city, Tuesday, 9 September 2025.
oracle’s stock price jumped by 21% after hours, even though they missed earnings estimates. investors are excited by the remaining performance obligations (rpo), which rose 359% year-over-year to $455 billion. this indicates strong future revenue. oracle’s cloud infrastructure is booming, with revenue up 55%. oracle also has deals with openai and google. four multibillion-dollar contracts were signed this quarter. oracle’s success highlights the importance of cloud infrastructure, where nvidia and tsmc are key players.
q1 earnings and market reaction
Oracle (ORCL) announced its q1 earnings, revealing revenue of $14.93 billion, which was below the expected $15.04 billion [1]. The earnings per share also missed estimates, coming in at $1.47 adjusted, compared to the anticipated $1.48 [1]. Despite these misses, the stock surged 21% in extended trading [1]. This positive market reaction was fueled by a significant increase in remaining performance obligations, a key indicator of future revenue [1][2]. The company’s stock performance is particularly noteworthy, considering the s&p 500 index has only gained 11% in 2025 [1].
rpo growth and future prospects
Oracle’s remaining performance obligation (rpo) reached $455 billion, a 359% increase year-over-year [1]. This substantial growth in rpo signals strong future revenue streams and long-term contracts, boosting investor confidence [1]. Oracle anticipates cloud revenue growth to exceed 40% in fiscal year 2026, with cloud infrastructure revenue expected to grow over 70% [7]. This projection is supported by major deals, including one with OpenAI to develop 4.5 gigawatts of U.S. data center capacity [1].
analyst perspectives and financial health
Analysts are closely monitoring oracle’s oci (oracle cloud infrastructure) revenue and backlog, with many raising their target prices for the stock [6]. Barclays increased its target from $221 to $281, and Morgan Stanley from $175 to $246 [6]. However, some analysts remain cautious, with monness maintaining a ‘hold’ rating due to concerns about oracle’s high valuation and negative free cash flow [6]. Morgan Stanley also noted that oracle’s operating margin could decrease from 44% in fiscal year 2025 to 39% in fiscal year 2029 [6].
strategic partnerships and market positioning
Oracle is capitalizing on the ai boom through its cloud infrastructure business and access to nvidia’s gpus [1]. The company is also expanding its cloud offerings by making google’s gemini ai models available on oracle’s cloud infrastructure [1]. These strategic partnerships and focus on cloud infrastructure have positioned oracle as a key player in the ai space [6]. CEO Safra Catz highlighted the signing of four multibillion-dollar contracts with three different customers this quarter, further solidifying oracle’s market position [1].