Oracle Corporation (ORCL) posted a strong start to fiscal 2026 that drew broad attention from Wall Street. The company reported that total cloud revenue grew 27% to $7.2 billion, with cloud infrastructure revenue rising 54% to $3.3 billion. Multi-cloud database services expanded even faster, with growth of more than 1,500% in the quarter. In addition, Oracle reported earnings per share of $1.47, missing analysts’ forecasts by $0.01. Analysts highlighted strong demand for Oracle Cloud Infrastructure, helped by contracts with OpenAI, xAI, Meta (META), Nvidia (NVDA), and Advanced Micro Devices (AMD). This mix of growth pushed Oracle shares higher, with the stock gaining 36% in a single session, its best one-day rise since 1992.
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Dependence on OpenAI
The growth story, however, is closely linked to one customer. Oracle noted that its remaining performance obligations, or future revenue backlog, increased to $455 billion. Reports suggest most of this balance comes from a single agreement with OpenAI. The artificial intelligence firm is expected to spend more than $300 billion on Oracle compute over five years starting in 2027.
Yet OpenAI has not posted a profit and currently generates about $12 billion in recurring annual revenue. Analysts note that this level of spend would require OpenAI to expand revenue far beyond its current base. D.A. Davidson’s five-star analyst Gil Luria said Oracle’s backlog numbers are impressive but tempered by the fact that most of the growth is tied to one partner. JPMorgan’s five-star analyst Mark Murphy raised his price target to $270 but also flagged that Oracle’s contract details remain unclear.
At the same time, Oracle faces financial pressure as it invests in cloud expansion. Free cash flow was negative $362 million in the first quarter due to $8.5 billion in capital spending, though full-year 2025 free cash flow reached $5.8 billion, a sharp rise from the prior year. Investors are weighing these numbers against the large bet on OpenAI and the risks tied to a single customer.
Is Oracle a Good Stock to Buy?
On the Street, Oracle has the backing of the analysts with a Strong Buy consensus rating. The average ORCL stock price target is $337.04, implying a 15.35% upside from the current price.
