Oracle reports fiscal Q2 2026 earnings after the market closes on Wednesday, December 10, in what has quickly become one of the most closely watched events of the AI era.
Wall Street expects another quarter of double‑digit growth, powered by Oracle Cloud Infrastructure (OCI) and a record AI backlog. Consensus forecasts cluster around $16.1–$16.3 billion in revenue—about 15% year‑over‑year growth—and non‑GAAP EPS near $1.64–$1.65, up roughly 11% from a year ago. [1]
But today’s earnings story is about far more than a single quarter. Oracle has:
- A roughly $300 billion multi‑year contract with OpenAI at the heart of its AI strategy [2]
- A contract backlog that exploded to about $455 billion, up 359% year on year in Q1 [3]
- More than $100 billion of debt and plans to borrow tens of billions more to build AI data centers [4]
Together, those numbers have turned tonight’s report into a referendum on whether Oracle is a visionary AI infrastructure winner—or the most leveraged bet in the entire AI trade.
What Wall Street Expects From Oracle’s Q2 2026 Earnings
Oracle’s fiscal second quarter (covering September–November 2025) wraps up a turbulent but transformative year for the company. Analysts broadly agree on the top‑line setup:
- Revenue: around $16.2 billion, up roughly 15–16% year‑over‑year [5]
- Non‑GAAP EPS: about $1.64–$1.65, up ~11% from $1.47 last year [6]
- Cloud Infrastructure (OCI): expected to grow ~70% year‑over‑year, making it the main engine of Oracle’s expansion [7]
In Q1 FY26, Oracle reported revenue of about $14.9 billion and EPS of $1.47, slightly missing consensus estimates but stunning investors with a 359% surge in Remaining Performance Obligations (RPO) to around $455 billion. [8]
That backlog—driven by a handful of giant AI infrastructure deals—sent Oracle’s stock soaring roughly 30–36% in a single day back in September, its best session in decades. [9]
Since then, though, the tone has flipped.
From AI Darling to “Debt Story”: How ORCL Got Here
After that blockbuster Q1, Oracle quickly became a poster child for the AI infrastructure boom:
- Cloud revenue in Q1 grew rapidly, with OCI up about 55% and total cloud revenue up 28% year‑over‑year. [10]
- Management guided for 77% OCI revenue growth in FY26, aiming for $18 billion in OCI revenue this fiscal year and projecting cloud revenue scaling towards $144–166 billion by 2030. [11]
- CEO Safra Catz called it an “astonishing” quarter and said RPO could surpass half a trillion dollars as Oracle signs more multi‑billion‑dollar customers. [12]
Shares ripped to record highs—but then gravity kicked in.
Over the past few months, ORCL has dropped roughly one‑third from its September peak, erasing much of that post‑earnings surge, even though the stock is still up around 30%+ year‑to‑date. [13]
Why the reversal? Three words keep coming up in analyst notes and in the bond market:
Debt, concentration, execution.
The $300 Billion OpenAI Bet and Stargate’s Shadow
At the center of the story is Oracle’s deepening partnership with OpenAI.
- Oracle is reportedly supplying cloud and AI compute to OpenAI under a contract worth about $300 billion over five years. [14]
- The deal is linked to Stargate LLC, a joint venture between OpenAI, SoftBank, Oracle and MGX that aims to invest up to $500 billion in AI infrastructure in the U.S. by 2029. [15]
Analysts estimate that, if fully realized, that OpenAI contract could approach one‑third of Oracle’s total revenue by 2028. [16]
That scale cuts both ways:
- On one hand, it cements Oracle as a key provider of AI compute, directly challenging hyperscalers like AWS, Microsoft Azure and Google Cloud in some of the largest AI workloads. [17]
- On the other, it creates “unprecedented single‑customer revenue exposure”, as one Bernstein analyst put it, tying a huge chunk of Oracle’s future to a partner that is still unprofitable and planning over $1 trillion in spending by 2030. [18]
If OpenAI’s financing or growth stumbles, Oracle could be left with under‑utilized, ultra‑expensive AI data centers.
Oracle has tried to counter that narrative by highlighting other mega‑customers, including a $20 billion AI infrastructure deal with Meta Platforms, and by emphasizing a pipeline of additional multi‑billion‑dollar cloud contracts. [19]
Even so, earnings commentary around customer diversification beyond OpenAI is likely to be one of the most scrutinized parts of tonight’s call.
$111.6 Billion in Debt and Negative Free Cash Flow
Oracle’s AI land‑grab isn’t being funded out of cash flow—it’s being financed with one of the largest corporate debt buildups in tech history.
Key numbers that investors are fixated on:
- Oracle conducted an $18 billion jumbo bond sale in late September, among the largest tech debt deals ever. [20]
- Total debt jumped to about $111.6 billion as of August, up from $84.5 billion a year earlier. [21]
- According to IG’s analysis, Oracle had roughly $105 billion of outstanding debt by the end of August and is reportedly seeking another $38 billion in financing to fund AI infrastructure. [22]
- Free cash flow has turned negative since fiscal Q4 2025, as capex ramps faster than operating cash generation. [23]
- Capital expenditure for FY26 is projected around $35 billion, up roughly 65% year‑on‑year, well above Oracle’s historical investment patterns. [24]
Bond markets have taken notice. Oracle’s five‑year credit default swaps have climbed to their highest levels since 2009, reflecting rising concern about leverage and the risk of a future ratings downgrade if debt growth outruns earnings. [25]
Ratings agencies Moody’s and S&P have already shifted Oracle’s outlook to negative, warning that leverage could exceed 4x debt‑to‑EBITDA by 2027–2028, potentially threatening its investment‑grade status. [26]
That’s why, for many institutional investors, tonight’s most important numbers are not EPS and revenue, but:
- Cash flow trends
- Capex guidance for the rest of FY26
- Management’s plan to keep debt under control while still chasing AI demand
AI Data Centers: Oracle’s Growth Engine and Risk Center
The debt is, in large part, funding a massive build‑out of AI‑optimized data centers—facilities with extremely high power density, advanced cooling (often liquid‑based), and ultra‑fast networking to run large AI models at scale. [27]
Across the industry, big cloud providers are expected to spend over $400 billion on AI infrastructure this year alone, with Oracle in the mix alongside Microsoft, Amazon and Google. [28]
Oracle’s build‑out is tightly intertwined with Stargate and its key hardware partners:
- NVIDIA benefits directly as Oracle buys high‑end GPUs—H100 and Blackwell chips—for its AI supercomputers. [29]
- Stargate plans to invest up to $500 billion in AI infrastructure by 2029, across U.S. and international sites, with Oracle both a shareholder and a core cloud provider. [30]
The bull case is that by front‑loading investment, Oracle can secure scarce power and GPU capacity and lock in long‑term customers at strong margins—management has talked about targeting 30–40% margins on AI infrastructure and 65–80% on its traditional cloud software. [31]
The bear case is that AI demand proves less durable than expected, or that pricing pressure intensifies as hyperscalers and new entrants chase the same workloads, making it harder for Oracle to earn an adequate return on tens of billions in capex.
Which narrative gets the upper hand will depend heavily on what Oracle says tonight about:
- Utilization of newly built AI capacity
- Pricing dynamics and margins in AI workloads
- The pace at which backlog is converting into recognized revenue
How ORCL Stock and Options Are Positioned Going Into the Print
The equity and options markets are signaling big expectations—and big nerves.
Stock performance
- ORCL traded around $220 per share early Wednesday afternoon, down about 0.7% on the day ahead of earnings. [32]
- The stock is down roughly 33–37% from its September peak, erasing most of the post‑Q1 euphoria. [33]
- Despite that pullback, ORCL remains up roughly 30%+ in 2025, as AI optimism still keeps longer‑term returns in positive territory. [34]
Technical analysis from IG notes that Oracle has dropped to test its 200‑day moving average and a long‑term uptrend line near the mid‑$180s, making tonight’s report a potential turning point: a beat could send shares toward the $240–$250 area, while a disappointment risks a retest of recent lows. [35]
Options market: double‑digit move priced in
Options traders are bracing for around a 10–11% move in ORCL stock following the report:
- TipRanks’ options data indicates an implied move of about 10.84% in either direction. [36]
- Investopedia similarly notes that options pricing suggests a swing of nearly 10%, enough to push the stock to a new record above $240 in a bullish scenario—or back toward the high‑$190s if things go wrong. [37]
That implied move is actually slightly lower than Oracle’s average post‑earnings move of ~13.5% over the past four quarters, but still large by mega‑cap standards. [38]
Analyst sentiment: bullish on AI, cautious on leverage
Wall Street’s view on Oracle is best described as “optimistic but uneasy.”
- A TipRanks survey shows a Moderate Buy consensus with 25 Buys, 11 Holds and 1 Sell, and an average price target around $350, implying roughly 60% upside from current levels. [39]
- IG cites LSEG data showing 33 of 46 analysts rating the stock Buy or Strong Buy, with an average target of about $337, ~55% above recent prices. [40]
- RBC Capital recently reaffirmed a “Sector Perform” rating with a $310 price target, highlighting growing investor caution around customer concentration, margins and incremental leverage. [41]
- TD Cowen reiterated a Buy with a $400 price target, arguing that concerns about an “AI bubble” and stretched OpenAI commitments may be overdone if Oracle can prove that OCI growth is broad‑based and sustainable. [42]
Add in cuts and resets from other big firms—Barclays trimming its target to $330, Citi to $375, and new coverage from Wells Fargo at $280—and you get a picture of a stock that many still like long‑term, but few are comfortable owning blindly. [43]
What To Watch on Tonight’s Oracle Earnings Call
For investors trying to separate signal from noise, here are the key questions Oracle needs to answer:
- Debt and Cash Flow
- How quickly can free cash flow swing back to positive territory?
- Will Oracle moderate its $35 billion FY26 capex plan, or double down?
- What are the specific financing plans for the additional tens of billions in debt the market expects?
- Backlog Conversion
- How much of the $455 billion+ backlog is starting to flow into recognized revenue?
- Are new bookings keeping pace with deliveries, or is backlog growth slowing?
- OpenAI Exposure vs. Diversification
- What percentage of OCI revenue and backlog is tied to OpenAI?
- How quickly are other hyperscale and enterprise customers—like Meta and large corporates—ramping their usage?
- Are contract terms with OpenAI evolving as Stargate’s financing and timelines shift?
- OCI Growth Trajectory
- Can Oracle back up its forecast of 77% OCI growth this year with hard data on utilization, pricing and new workloads? [44]
- How does management see OCI’s growth curve through 2027, especially as competitors build their own AI superclusters?
- Margins and Profitability
- Are AI infrastructure margins trending toward the 30–40% target range, or being squeezed by rising power, GPU and construction costs? [45]
- How is Oracle balancing high‑margin software growth against capex‑heavy infrastructure?
- Regulatory and Concentration Risks
- Does Oracle expect antitrust or regulatory scrutiny around Stargate or major AI infrastructure partnerships? [46]
- How is the company addressing concerns about “too much AI power” being concentrated in a handful of players?
Why Oracle’s Earnings Matter Far Beyond ORCL
Oracle’s Q2 report is not just another tech earnings print. It’s a bellwether for the entire AI infrastructure cycle.
- If Oracle shows strong cloud and AI growth while reassuring investors on debt and diversification, it could reignite enthusiasm across AI hardware (like NVIDIA), hyperscaler competitors, and other data‑center‑heavy names. [47]
- If, instead, the call highlights slower‑than‑expected backlog conversion, rising financing costs, or over‑reliance on OpenAI, it could reinforce fears of an AI bubble, with ripple effects throughout growth tech and high‑yield credit. [48]
In simple terms: Oracle is one of the first companies to show the true balance sheet cost of the AI revolution. The market wants the benefits of generative AI—but is only now being forced to confront the price tag.
Tonight’s earnings may not deliver a final verdict, but they will provide some of the clearest clues yet about whether debt‑driven AI megaprojects are a sustainable engine for shareholder value, or the next big test of market risk tolerance.
References
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