Oracle Said AI Demand Is Surging and Infrastructure Is Racing to Keep Up

9/11/2001, We will never forget!

Editor’s Note: Back in late June, I highlighted the continued growth potential in AI infrastructure stocks following cloud computing giant Oracle’s (ORCL) earnings report. Two weeks later, CEO Safra Catz released an update on Oracle’s future revenue outlook, noting that database revenue continued to grow at over 100% and that the company was in the process of signing large cloud services agreements.

At the time, I emphasized that this spoke to the volume of AI-driven demand Oracle was seeing, and the broader growth potential across the infrastructure stack. I highlighted Nvidia (NVDA), Broadcom (AVGO), Advanced Micro Devices (AMD), Cisco Systems (CSCO), and Arista Networks (ANET) as key beneficiaries of this swelling demand. Since then, their shares have rallied 22%, 46%, 25%, 5%, and 68%, respectively.

Oracle’s latest earnings report and forward guidance on Tuesday night reaffirmed my conviction. The AI infrastructure cycle is gaining speed and the companies building the backbone have more upside.

Oracle Said AI Demand Is Surging and Infrastructure Is Racing to Keep Up

• Oracle reported in-line EPS and revenue for 1Q2026.
• Backlog guidance greatly exceeded Wall Street’s expectations.
• Founder Larry Ellison said it can’t keep up with customer demand.

AI demand isn’t just growing, it’s reshaping the entire infrastructure stack in real time…

Early in my finance career, I recognized a key skill that would enable me to better serve my clients: the ability to identify trends and habits. I knew that by understanding and remembering these patterns, I could help customers make smarter investment decisions. After all, times may change, but situations tend to repeat themselves. Recognizing how similar events have played out in the past allows us to separate the signal from the noise.

One trend I picked up on involves corporate earnings, particularly in the first quarter of the year. I noticed that most companies try to avoid revising their financial figures after releasing first-quarter results. Why? Because they still have enough time to meet their annual goals. If they’re behind, they have time to catch up; if they’re ahead, they have a cushion in case of a slowdown.

But when a company adjusts its annual guidance while reporting first-quarter results, it’s time to take notice.

On Tuesday, such an event stood out. Enterprise software, cloud computing, and database management system provider Oracle (ORCL) reported in-line earnings and revenue. However, CEO Safra Catz said backlog had blown past Wall Street’s expectations, swelling to $455 billion. Not only that, but she said cloud revenue could grow eightfold over the next five years.

Catz attributed the change to surging AI demand. The shift should support an improved outlook for technology infrastructure companies, specifically those building the semiconductors and networking equipment that power data centers. This momentum is likely to drive technology stocks higher, further strengthening tech-heavy indexes like the S&P 500 and Nasdaq Composite.

But don’t take my word for it, let’s look at what Oracle had to say…

Oracle’s Q1 results point to a business that’s not just scaling, it’s accelerating. CEO Safra Catz said the company’s remaining performance obligations (“RPO”) surged to $455 billion, up 359% year-over-year and $317 billion sequentially. For perspective, that compares to Wall Street’s expectation going into the quarter of $150 billion. In other words, the amount of unfinished business the company has on its books is three times what was expected. Management expects that RPO number could soon grow to $500 billion.

And that backlog is already translating into forward momentum.

Oracle now expects cloud infrastructure revenue to grow 77% to $18 billion this fiscal year. Not only that, but management anticipates it will scale to $32 billion, $73 billion, $114 billion, and $144 billion over the next four years. Much of that revenue is already booked, and demand continues to outstrip supply.

To meet that demand, Oracle is ramping capital expenditures to $35 billion in FY2026. The vast majority is going toward revenue-generating data center equipment, not land or buildings. One thing to remember here is that the company has reiterated that each dollar spent on capex is already allocated in terms of customer demand. Thought of another way, it’s not stuck with products in inventory it can’t get rid of. That means Oracle can recognize revenue quickly.

The company is also expanding its multi-cloud footprint aggressively, with 34 embedded data centers already live inside Amazon Web Services, Microsoft’s Azure, and Google Cloud Platform. Another 37 are coming online. That infrastructure buildout supports both AI training and inference, with Oracle betting big on the latter as the larger long-term opportunity. The introduction of vectorized enterprise data and direct Large Language Model integration positions Oracle as a first mover in AI-native enterprise automation.

Looking ahead, Oracle expects mid-teens operating income growth this year and stronger acceleration in FY2027. Management’s second-quarter guidance calls for total revenue growth of 12–14% in constant currency, cloud revenue growth of 32–36%, and non-GAAP EPS growth of 8–10%. Catz added that moving forward, she’s “even more confident in the company’s ability to accelerate top and bottom-line growth.”

So, as I said three months ago, when a company with Oracle’s scale and visibility raises or lowers its demand guidance, it’s worth paying attention. Based on the commentary we just looked at, customers are asking for more data center capacity—not less. That should underpin steady demand for companies that make AI infrastructure products like semiconductors—Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD)—and networking hardware—Cisco Systems (CSCO) and Arista Networks (ANET). The shift should support a long-term, steady rally in the S&P 500 and Nasdaq Composite.

If you'd like to receive more commentary like this to your inbox daily or see how I'd invest for any type of market, click here.