Oracle Stock Before Q1 Earnings: Buy Now or Wait for Results?

Oracle ORCL is scheduled to report its first-quarter fiscal 2026 results on Sept. 9.For the first quarter of fiscal 2026, total revenues are expected to grow in the band of 11-13% at constant currency (cc) and between 12% and 14% in dollar terms.The Zacks Consensus Estimate for revenues is currently pegged at $15.01 billion, suggesting growth of 12.83% from the year-ago quarter’s reported figure.Image Source: Zacks Investment ResearchNon-GAAP earnings per share are expected to be in the range of $1.44-$1.48 in cc (representing 4-6% growth) and between $1.46 and $1.50 in USD (representing 5-7% growth).The consensus mark for earnings is pegged at $1.47 per share, unchanged over the past 30 days. The figure indicates 5.76% growth from the year-ago period. In the last reported quarter, Oracle delivered a negative earnings surprise of 3.66%. Markedly, the company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters, while beating the same twice, the average being 1.9%.Oracle Corporation Price and EPS Surprise Oracle Corporation price-eps-surprise | Oracle Corporation QuoteEarnings WhispersOur proven model does not conclusively predict an earnings beat for Oracle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Oracle has an Earnings ESP of -0.17% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Likely to Shape Oracle’s Fiscal Q1 ResultsOracle approached its first quarter of fiscal 2026 earnings release with significant momentum following strong fourth-quarter results that exceeded expectations. The technology giant's aggressive pivot toward AI infrastructure has positioned the company for accelerated growth, though execution challenges and market dynamics presented both opportunities and headwinds as the quarter progressed.The company entered fiscal 2026, building on a remarkable fiscal fourth quarter performance where cloud infrastructure revenues surged 52% to $3.0 billion, driving total cloud revenues up 27% to $6.7 billion. Management's bold guidance projecting over 70% cloud infrastructure growth for fiscal 2026 energized investors, pushing Oracle's stock to all-time highs during the period.Oracle's massive Stargate partnership with OpenAI emerged as the centerpiece of its AI strategy during the quarter. The landmark deal, initially involving 4.5 gigawatts of data center capacity and potentially worth $30 billion in annual revenues starting fiscal 2028, validated Oracle's infrastructure investments. The Abilene, Texas facility became operational during the to-be-reported quarter, with Oracle delivering initial Nvidia GB200 racks and supporting early training workloads. This partnership, part of a broader $500 billion AI infrastructure initiative, positioned Oracle alongside technology titans competing for AI dominance.However, significant operational challenges might have tempered the enthusiasm. Oracle implemented strategic layoffs affecting hundreds of positions globally, particularly impacting the Oracle Cloud Infrastructure division in India, the United States, and Canada. The workforce reductions, framed as performance-based restructuring, reflected the company's need to manage costs while massively scaling AI infrastructure investments. Capital expenditure requirements ballooned from $21 billion in fiscal 2025 to a projected $25 billion-plus in fiscal 2026, straining cash flows and necessitating careful resource allocation.Supply chain constraints and semiconductor availability are expected to have posed additional challenges as Oracle expanded its data center capacity. The broader industry faced potential AI chip shortages, with complex geopolitical tensions and concentrated manufacturing adding risk to Oracle's ambitious expansion plans. These supply constraints potentially limited the company's ability to fully capitalize on surging demand during the quarter.Price Performance & ValuationShares of ORCL have gained 34.1% year to date compared with the Zacks Computer and Technology sector’s 14.1% return. While Oracle has a strong foothold in the database management and ERP software markets, its competitors are making significant inroads in the cloud space. In terms of competitive positioning, Amazon AMZN maintains a strong lead in the market, though Microsoft MSFT and Alphabet GOOGL-owned Google continue to achieve higher growth rates. AMZN, MSFT and GOOGL’s second-quarter worldwide market shares were 30%, 20% and 13%, respectively. Amazon Web Services, Google Cloud and Microsoft Azure combined accounted for a whopping 63% of total enterprise spending on cloud infrastructure services during the second quarter of 2025, according to new data from IT market research firm Synergy. Oracle has outperformed its cloud peers in the year-to-date period.ORCL Outperforms Sector, Competitors YTDImage Source: Zacks Investment ResearchIt is also important to consider whether the stock's current valuation accurately reflects the company's long-term growth potential and ability to navigate the competitive landscape.ORCL is trading at a premium with a trailing 12-month P/E of 45.98X compared with the Zacks Computer-Software industry’s 37.75X, reflecting a stretched valuation.ORCL’s P/E TTM Ratio Depicts Stretched ValuationImage Source: Zacks Investment ResearchInvestment Considerations: Balancing Risk and RewardOracle's premium valuation reflects market enthusiasm for its AI infrastructure pivot, particularly the transformative Stargate partnership potentially worth $30 billion annually. However, execution risks remain substantial with massive capital expenditure requirements exceeding $25 billion, ongoing workforce restructuring, and persistent supply chain constraints limiting capacity expansion. While management's aggressive growth targets and strong cloud momentum support the bull case, intensifying competition from established hyperscalers and the stock's significant year-to-date appreciation suggest limited near-term upside. Investors should hold existing positions but wait for a pullback before initiating new positions, particularly given potential volatility around earnings.ConclusionOracle's AI infrastructure transformation shows promise, but premium valuation at 45.98x trailing earnings amid execution risks suggests caution. While the Stargate partnership validates long-term potential, massive capital requirements and supply constraints warrant patience. Current shareholders should hold, but new investors should await a better entry point.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks