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Oracle Boosts Annual Revenue Forecast Amid Strong Cloud Demand, Shares Surge

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Oracle raised its annual revenue growth forecast on Wednesday, driven by strong demand for its cloud services, particularly as businesses ramp up AI deployments. The company now expects fiscal 2026 revenue to reach at least $67 billion, up from its previous projection.

CEO Safra Catz revealed on a post-earnings call that Oracle anticipates its total cloud growth — including applications and infrastructure — to jump from 24% in fiscal 2025 to over 40% in fiscal 2026.

Oracle’s growth momentum is mainly fueled by its Oracle Cloud Infrastructure (OCI) platform and its support for AI workloads. Industry experts note that Oracle’s multi-cloud strategy and deep integration with enterprise applications have made OCI a critical component for many customers’ data needs.

Rebecca Wettemann, CEO of analyst firm Valoir, highlighted Oracle’s ability to embed generative AI capabilities into its cloud application suite without additional costs as a key factor reducing adoption barriers and encouraging experimentation.

For the quarter ending May 31, Oracle reported revenue of $15.90 billion, surpassing analysts’ expectations of $15.59 billion. The cloud services and license support segment, Oracle’s largest, posted $11.70 billion in revenue, up 14% year-over-year.

Adjusted earnings per share were $1.70, beating estimates of $1.64.

Oracle to Purchase $40 Billion Worth of Nvidia Chips for OpenAI’s US Data Center

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Oracle is set to invest approximately $40 billion in purchasing Nvidia’s high-performance chips to support OpenAI’s new data center in the United States, according to a report by the Financial Times. This significant investment highlights the growing collaboration between cloud service providers and AI companies as they race to build advanced infrastructure to power next-generation artificial intelligence applications.

The new data center will be located in Abilene, Texas, and forms a critical part of the U.S. Stargate Project, a government-backed initiative involving leading AI companies aimed at strengthening America’s position in the global AI race. This project reflects the increasing emphasis on domestic AI capabilities amid intensifying competition with other countries developing their own AI technologies.

Oracle plans to acquire roughly 400,000 of Nvidia’s most advanced GB200 chips, which will be leased to OpenAI to provide the massive computing power required for AI workloads. While Oracle and OpenAI have not publicly commented on the deal, sources familiar with the arrangement confirmed the details to the Financial Times. Nvidia also declined to comment on the specifics.

The data center is expected to become fully operational by mid-2026, with Oracle securing a 15-year lease on the site. Financing for the project is backed primarily by JPMorgan, which has extended two loans totaling $9.6 billion, while the facility’s owners, Crusoe and Blue Owl Capital, have contributed approximately $5 billion in cash. This large-scale investment underscores the commitment of both private and public sectors to accelerate AI development on U.S. soil.

Workday Shares Drop as Lukewarm Subscription Forecast Signals Caution in Tech Budgets

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Workday Inc. saw its shares fall by 5% in extended trading Thursday after forecasting second-quarter subscription revenue that merely met Wall Street expectations, signaling caution amid weakened client spending and ongoing economic uncertainty in the enterprise software market.

The California-based human capital and financial management software provider projected Q2 subscription revenue of $2.16 billion, aligning with analysts’ consensus but doing little to boost investor confidence. The company also reiterated its full-year guidance of $8.8 billion in subscription revenue for fiscal 2026.

“We remain focused on executing in this uncertain environment,” said CFO Zane Rowe.

Despite this cautious outlook, Workday reported solid Q1 results:

  • Total revenue: $2.24 billion (vs. $2.22 billion expected)

  • Subscription revenue: $2.06 billion (slightly above $2.05 billion consensus)

  • Adjusted EPS: $2.23 per share (beating $2.01 estimate)

In tandem with its earnings release, the company announced a new $1 billion share repurchase program, a move often intended to reassure investors amid stock volatility.

Competitive Landscape and Federal Setback

Workday competes against enterprise giants like Oracle and SAP, both of which boast larger back-office software businesses. Analysts note that increased competition in the HR and finance software market may pressure pricing and margins in the coming quarters.

Adding to its recent headwinds, Workday was stripped of a federal HR platform contract earlier this month by the U.S. Office of Personnel Management. The decision followed criticism that the award process did not seek competitive bids. The canceled contract had been connected to efforts from within the Elon Musk-backed campaign to restructure federal workforce management, which could further dampen Workday’s growth in the public sector.

Analyst Outlook

While the company continues to grow and outperform near-term expectations, its muted forecast reflects broader macroeconomic concerns and signals that even resilient SaaS firms are not immune to tightening tech budgets. Analysts expect Workday to maintain its position among top enterprise software providers but caution that client spending softness and lost contracts may limit upside in the short term.