Oracle Falls 2% Pre-Market Ahead of Earnings: Can AI Cloud Growth Reverse the Decline?

TradingKey - In Thursday's U.S. premarket, Oracle (ORCL) fell nearly 2%, extending weakness from the previous session after snapping a four-day winning streak to close lower on Wednesday. Although Wall Street is broadly optimistic about cloud growth driven by AI demand, investors remain cautious ahead of the earnings release.

Source: TradingView

Oracle will report its fiscal first-quarter 2027 results after the market close on Thursday. FactSet expects quarterly revenue to reach approximately $19.1 billion, up over 28% year-over-year, with adjusted earnings per share projected at $1.74, compared with $1.47 in the prior-year period. These forecasts fall largely within management's prior guidance range. Oracle expected total quarterly revenue growth of 27% to 29%, constant-currency cloud revenue growth of 57% to 63%, and adjusted EPS of $1.71 to $1.75.

The strong year-over-year growth is mainly driven by Oracle Cloud Infrastructure (OCI). Robust demand for computing power from OpenAI and other AI clients has pushed Oracle to accelerate data center construction.

Mizuho expects that the company could add nearly 1 gigawatt of computing capacity this quarter, compared to an addition of approximately 1.2 gigawatts for the entire fiscal year 2026. If the new capacity comes online smoothly, Oracle will have the opportunity to accelerate the delivery of its accumulated AI cloud orders and further prove that current growth is constrained by supply capacity rather than insufficient customer demand.

However, high expectations also mean that Oracle has little room for error. The market expects that while quarterly revenue and profit will grow significantly year-over-year, they may decline slightly from the previous quarter.

Meanwhile, to achieve its cloud growth targets, Oracle needs to significantly accelerate the pace of generating new infrastructure service revenue. Should data center construction be delayed, GPU deliveries be blocked, or order conversions fall below expectations, even meeting overall guidance may fail to satisfy investors.

The options market currently expects that Oracle's stock price could fluctuate by about 11% around the earnings release, equivalent to nearly $18 per share. Over the past two weeks, call option trading has been noticeably active, reflecting bets by some capital that the earnings report could spark a new rally. Last September, Oracle's shares surged about 36% in a single day after its results significantly beat expectations.