Oracle's AI Ambition Comes With a Brussels Wildcard
Published on 09/11/2026 at 08:10 | Editorial boerse-global.de
Oracle's latest quarter delivered the kind of headline numbers that normally send a stock soaring. Instead, the shares slipped 5.4% in regular US trading on the day of the release before clawing back several percentage points after hours — a muted reception that says less about demand for Oracle's cloud services than about the sheer cost of building them.
In German trading on Thursday, the stock shed 5.3% to close at EUR 131.64, leaving it 8.8% below its 200-day moving average of EUR 144.40. The medium-term trend remains under pressure despite the operational wins, with the shares down 21% year-to-date and more than halved over the past twelve months. From their 52-week high of EUR 288.95 set last September, they now sit 54% lower.
A quarter that beat on every line
For the fiscal 2027 first quarter ending in August, revenue climbed 30% to $19.3 billion, while adjusted earnings per share came in at $1.92 — comfortably ahead of the $1.74 consensus. Cloud infrastructure (IaaS) was the standout, surging 121% to $7.4 billion.
The order book tells an even more dramatic story. Remaining performance obligations (RPO) ballooned to $664 billion, an increase of $209 billion in a single year. New AI cloud contracts worth more than $30 billion were signed during the quarter alone.
Yet the capital required to service that backlog is staggering. Capital expenditure rocketed from $8.5 billion a year earlier to $28.5 billion, pushing free cash flow to negative $5.4 billion, compared with negative $362 million in the prior-year period. Total debt now stands at $125 billion, and Oracle has turned to a $20 billion at-the-market equity program to help fund the expansion.
Should investors sell immediately? Or is it worth buying Oracle?
The company added 850 megawatts of new data center capacity during the quarter and shipped more than 300,000 GPUs, with its GPU fleet running at close to 98% utilization. Operating cash flow, meanwhile, jumped 184% to $23 billion — evidence that the core business is gaining real substance even as the investment bill mounts.
Guidance stays bullish
Management nudged its full-year adjusted EPS forecast to $8.10 and reaffirmed revenue of at least $90 billion. For the current quarter, Oracle projects revenue growth of 30% to 34% and adjusted EPS of $1.85 to $1.93.
The analyst community remains split on what all this is worth. Bernstein raised its price target to $325 on September 3 while reiterating a buy rating. Mizuho Securities followed a day later, pointing to an expanded contract with the US Department of Veterans Affairs — its ceiling lifted by roughly $17 billion — and confirming a $320 target with an outperform rating.
Others are far more cautious. Morgan Stanley lifted its target only slightly, to $210, and stayed neutral. Royal Bank of Canada, at $190, also treats the stock as a hold rather than a buy. That spread — from well above $300 to just under $190 — captures the uncertainty hanging over the shares: operational strength on one side, regulatory and valuation risk on the other.
The Brussels angle nobody is pricing
What has received far less attention than the cloud growth and cash burn debate is a development from early September: according to Reuters, the European Commission has begun gathering information from third parties about Oracle's licensing practices. No formal investigation has been opened at this stage, but anyone familiar with the history of European antitrust proceedings knows that such preliminary inquiries can evolve into multi-year cases carrying substantial fines.
That is precisely why it deserves closer scrutiny. Much of the stock's brutal decline can be explained by worries over the capital intensity of its AI cloud strategy. The EU review adds a structural burden that is barely reflected in the current price — simply because it is too fresh and too vague to have entered valuation models.
With annualized volatility running at 53%, Oracle remains a white-knuckle ride for shareholders. The operational trajectory argues that the recent selloff has been overdone in parts. But the budding EU probe into licensing practices is a risk that should not be waved away, especially given how early it is and how far it could yet go. Investors would be wise to track events in Brussels as closely as the next set of cloud growth figures — both are likely to shape the share price more than the market currently assumes.
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