Oracle Stock Faces Pressure Despite Cloud Growth

TLDR

Table of Contents

Oracle Japan shares gained about 8% after record first-quarter revenue and profit.
Cloud revenue at Oracle Japan climbed 31.7%, helping operating profit rise 22.7%.
Oracle Corp shares fell 3.47% as investors focused on data-centre spending and Project Jupiter.
Oracle reported strong cloud demand, but free cash flow remained negative at $5 billion.
Stifel and UBS maintained Buy ratings despite concerns over financing, spending and project execution.

Oracle Japan shares surged Friday after the company reported record first-quarter revenue and profit. The move created a contrast with Oracle stock in New York, where the US parent fell as investors weighed costs from its data-centre expansion.

Oracle Corporation, ORCL

Oracle stock splits between Japan and US

Oracle Japan traded near ¥9,847, up 7.7%, after reaching ¥10,040. Revenue rose 13% to ¥74.86 billion, while cloud revenue increased 31.7% to about ¥25.14 billion.

Operating profit climbed 22.7% to ¥25.92 billion, while net income rose 23.2% to ¥18.25 billion. The results followed Oracle’s recent earnings rally, when strong cloud demand supported shares after quarterly results.

Japan unit turns cloud growth into profit

Oracle Japan’s operating margin reached about 34.6%, up from roughly 31.9% a year earlier. Profit growth therefore outpaced sales growth as the company converted rising cloud demand into stronger earnings.

Cloud services now generate about one-third of Oracle Japan’s sales. The local business also recorded faster cloud growth than total revenue, giving investors profit figures rather than relying only on future demand forecasts.

US parent spends heavily on capacity

Oracle Corp reported 30% total revenue growth, 62% cloud revenue growth and 121% growth in cloud-infrastructure revenue. Remaining performance obligations reached $664 billion. The figure places Oracle within a wider AI infrastructure spending cycle as cloud providers add capacity.

However, free cash flow was negative $5 billion as spending continued. Oracle’s data-centre program requires heavy investment to support contracted demand and future cloud growth.

Project Jupiter added another point of focus. Bloomberg reported that Oracle sent the developer a force majeure notice covering possible payment protection if the New Mexico facility misses its planned 2028 start. Oracle said it does not expect a delay.

Analysts watch financing and execution

Stifel analyst Brad Reback kept a Buy rating and $200 price target. He described the force-majeure language as a precaution rather than evidence that Oracle plans to leave Project Jupiter.

UBS analyst Karl Keirstead also maintains a Buy rating, with a $250 target. Recent coverage of Project Jupiter permit challenges has kept attention on construction schedules, capital needs and the timing of new cloud capacity.

The split between Oracle Japan and Oracle Corp shows two different market reactions. Japan investors focused on rising margins and cloud profit, while US investors weighed heavy spending, financing needs and delivery risks tied to capacity expansion.

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