Cloud revenue accelerates in Q1 FY2026, AI infrastructure demand lifts remaining performance obligations, OpenAI contract shapes capital plans, valuation and S&P 500 leadership sharpen portfolio questions for institutional investors
SINGAPORE, Sept. 23, 2025 (GLOBE NEWSWIRE) — ELD Asset Management positions Oracle Corporation’s latest numbers as a defining moment in the AI infrastructure cycle, with the enterprise group’s cloud engines gathering force while capital requirements climb. For Q1 FY2026, the quarter ended August 2025, total cloud revenue advances 27% year on year to $8.11 billion and cloud infrastructure revenue rises 54% to $3.72 billion, presenting momentum that institutional allocators can calibrate against near-term cost pressures.
Oracle’s multi-cloud database services tied to Amazon, Google and Microsoft expand 1,529% in Q1 FY2026, reinforcing the strategy of placing workloads alongside customers’ preferred platforms. Group revenue increases 12% in USD terms to $16.78 billion for the quarter, although non-GAAP earnings per share register $1.65, a shortfall of $0.01 relative to consensus. GAAP earnings per share stand at $1.13, with net income of $3.30 billion as operating expenses reach $7.03 billion.
The forward book intensifies. Remaining performance obligations are now disclosed at approximately $455 billion for Q1 FY2026, signalling contracted revenue to be recognised across coming periods. Capital expenditure accelerates to $9.57 billion in the quarter, nearly four times the $2.58 billion invested in the comparable quarter a year earlier, underlining the build-out required to meet AI workloads. Jason Harrison, Senior Vice President at ELD Asset Management, notes that “the substantial contract backlog provides revenue visibility, though execution capabilities will determine long-term returns on these significant investments.”
Contract concentration is central to the investment debate. Market intelligence highlights a multi-year agreement with OpenAI estimated at about $300 billion across five years commencing in 2027, anchoring demand for compute capacity. The scale enhances strategic clarity while introducing dependency on a single counterparty’s technology roadmap and funding cadence. Harrison comments that “fulfilling large, dated commitments requires disciplined cash allocation before revenue recognition, so portfolio sizing should reflect both the growth optionality and the liquidity profile.”
Valuation signals reflect the AI trade’s breadth. In September 2025, a single-day share price rise of 36% lifts Oracle’s market capitalisation intraday to roughly $1.25 trillion, later settling near $1.01 trillion as trading consolidates. The forward price-to-earnings multiple of about 45.3 sits well above peers such as Amazon near 31.3 and Microsoft near 31 for 2025 year-to-date. Across the index, AI-centric leaders account for close to 30% of S&P 500 weight in 2025 year-to-date, with research houses attributing roughly half of the index’s 11% gain this year to the theme and identifying an “AI premium” of about 14.2% on valuations. The broader narrative includes the transformation of champions such as Nvidia, whose capitalisation has approached roughly $4.51 trillion in 2025, underscoring the market’s willingness to capitalise infrastructure winners.
