Oracle's Q1 2026: Contradictions Emerge on AI/Cloud Databases, Inferencing Demand, and OCI Growth

The above is the analysis of the conflicting points in this earnings call

Business Commentary:

• Record Revenue and RPO Growth:
• Oracle reported total revenues of $14.9 billion for Q1 FY2026, up 11% from last year.

• The growth was driven by a significant increase in remaining performance obligations (RPO), which now top $455 billion, up 359% from last year.

• Cloud Revenue and Infrastructure Growth:

• Cloud revenue was up 27% to $7.2 billion, with cloud infrastructure revenue reaching $3.3 billion, up 54% year-on-year.

• This growth was attributed to strong demand for Oracle Cloud Infrastructure (OCI) products, especially in AI workloads.

• AI Adoption and Strategic Partnerships:

• Oracle has become the go-to place for AI workloads, signing significant cloud contracts with major AI companies like OpenAI, xAI, Meta, NVIDIA, and AMD.

• The company has leveraged its technology to build GPU-centric data centers, resulting in faster and more cost-efficient AI training capabilities.

• Operating Income and CapEx Outlook:

• Oracle's operating income grew 7% to $6.2 billion in Q1 FY2026.
• The company anticipates CapEx will be around $35 billion for fiscal year 2026, focusing on revenue-generating equipment and capacity expansion to support the large RPO backlog.