Oracle’s Co-CEOs Deliver Explosive Growth, but Stock Plunges 50% in Their First Year
Oracle's co-CEOs oversaw one of the fastest contract buildouts in enterprise software history, yet the stock cratered anyway. The question investors are wrestling with now cuts to the heart of the AI buildout era.
One year into the most recent co-CEO era at Oracle (NYSE:ORCL | ORCL Price Prediction), the stock is down 50.2% over the trailing 12 months, with a 52-week range that has swung from a high of $329.50 to a low of $114.50. Shares changed hands around $148.99 in Monday’s premarket.
Clay Magouyrk and Mike Sicilia took over as co-CEOs near the peak. The contracted business under their leadership then grew at a pace almost nothing in enterprise software has matched. The stock went the other way. Did the business genuinely improve, or did the market simply reprice what investors will pay for growth that requires heavy capital investment?
What Changed Under the New Chiefs
Remaining performance obligations, essentially the dollar value of signed contracts not yet recognized as revenue, ended Q1 FY2027 at $664 billion, a $209 billion year-over-year increase. Cloud infrastructure revenue grew 121%, and Oracle booked more than $30 billion in new AI cloud contracts in a single quarter.
The operational execution has real substance. Oracle delivered 850 megawatts and more than 300,000 GPUs since Q4, with utilization at 97.9% and renewals coming in at a 20% premium. Total revenue reached $19.34 billion, up 29.6%, versus the $14.93 billion posted in the quarter the handover happened. Co-CEO Magouyrk said, “We are delivering data center and GPU capacity at a pace that would have seemed impossible only a year ago.”
The multicloud pact with Microsoft (NASDAQ:MSFT) Azure, Amazon (NASDAQ:AMZN) AWS, and Google is the strategic pivot. Multi-cloud database revenue grew 353% year over year. The GPU muscle comes from Nvidia (NASDAQ:NVDA), whose Vera Rubin systems ship to Oracle customers in Q2. (The power, cooling, and networking suppliers riding the same buildout are the subject of a free report on seven non-chipmaker AI infrastructure names.)
Where the Skeptic Case Lives
Capital intensity is the whole bear case. Q1 capex hit $28.5 billion, free cash flow was negative $5.4 billion, and management guided FY27 capex to $90 billion to $95 billion. Oracle completed a $20 billion at-the-market equity issuance, and interest expense rose 55% to $1.4 billion. CFO Hilary Maxson has flagged a roughly five-percentage-point full-year gross margin decline for fiscal 2026.
The earnings optics deserve scrutiny. FY26 EPS of $7.63 flatters against FY27 guidance of $8.10, but Q2 FY26’s $2.26 EPS included a $2.7 billion Ampere divestiture gain. The remaining performance obligations figure is only as good as the customers behind it, and cash goes out years before revenue arrives.
Verdict: Year One Grade
Grade: B+. The co-CEOs inherited businesses they already ran and delivered a scale test with numbers that back the story. Worth watching over the next 12 months is whether operating cash flow of $23.1 billion continues to outpace net cash capex, which management estimates at no more than $70 billion for the year. Wall Street is with them: 82% bullish and a $237.97 consensus price target. Now the co-CEOs need to prove it.
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
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