Oracle Expands AI Cloud Customer Base and Reports Record Backlog
Oracle reported over $30 billion in new artificial intelligence cloud contracts during its first quarter of fiscal year 2026. This growth, combined with a more than doubling of non-OpenAI backlog, has weakened the bear case that previously relied on Oracle's dependence on OpenAI for much of its revenue performance obligations (RPO). The company now holds $664 billion in remaining performance obligations and is seeing broader demand across customer bases. Oracle’s cloud infrastructure revenue surged 121% to $7.388 billion, with total revenue rising by nearly 30%. Despite this strong financial report, Oracle's stock remains down over 20% year-to-date. Management highlighted that many new contracts are pre-paid or involve customer-owned hardware, reducing the need for additional cash outflows from Oracle even as capital expenditures remain high. The company expects half of its RPO to convert into sales within a defined window but acknowledges risks around timing and cancellations. While OpenAI's role has diminished in relative terms, it remains significant enough that any setbacks could still impact performance.
Tickers: $ORCL
Topics: AI backlog growth cloud computing revenue performance