Oracle Corp (NYSE:ORCL, XETRA:ORC) shares may be falling on Thursday morning after soft earnings, but analysts see long-term potential in its record $523 billion AI backlog and accelerating GPU demand.
Wall Street analysts largely viewed the weakness as temporary, reflecting heavy investment in AI infrastructure rather than a deterioration in fundamentals.
Jefferies called the quarter “mixed,” noting that IaaS growth of 66% year-on-year was below the Street estimate of 71%, while operating margin held steady at 42%.
“The vast majority of the incremental bookings added…are tied to near-term capacity availability, reinforcing demand visibility and potential to convert to revenue sooner,” analysts wrote.
The firm also pointed to GPU traction, noting that “GPU-related revenue jumped 177% y/y as ORCL delivered 50% more GPU capacity vs F1Q.”
Wedbush emphasized the strength of Oracle’s AI-related backlog. “Oracle added impressively $69 billion in incremental RPO…This is the number we are laser focused on vs. the actual top-line result this quarter,” they wrote.
Wedbush added that the backlog could translate into “eye-popping revenue growth of 17%+ in FY26 and then roughly 35% in FY27 and ~45% in FY28 as conversion of AI backlog takes place over the coming years.”
Bank of America described the quarter as a timing mismatch between heavy AI infrastructure buildout and revenue. “OCI revenue growth of 69% y/y was only inline with Street, while capex of $12bn was $4bn ahead of consensus…We view the current mismatch of spend versus revenue as an investment curve issue rather than a change in fundamentals.”
The firm added, “AI demand continues to swell, large site builds are progressing on schedule, and Oracle still has healthy access to multiple financing channels.”
Despite short-term misses, analysts agree Oracle’s long-term AI and cloud growth potential remains intact, framing any near-term sell-off as a buying opportunity.