On September 11, Jim Cramer said Oracle Corporation’s (NYSE:ORCL) latest quarter gave him “whiplash” as the stock erased an early gain, but the Mad Money host came away more bullish on the company’s artificial intelligence buildout. He pointed to Oracle’s 121% jump in cloud infrastructure revenue and $664 billion remaining performance obligation as evidence that AI demand is translating into contracted business, while customer prepayments are helping reduce the cash burden of its expansion.
Oracle’s fiscal first-quarter 2027 revenue rose 30% year over year to $19.3 billion, while total cloud revenue increased 62% to $11.61 billion. Cloud infrastructure revenue reached $7.4 billion, and Oracle delivered 850 megawatts of additional data-center capacity and more than 300,000 GPUs. RPO increased $209 billion from a year earlier to $664 billion. The stock initially jumped after the results but closed September 11 down 1.74% at $150.28, which points to continued investor concerns about the cost of the AI expansion.
Cramer Sees a More Manageable AI Buildout
Cramer’s bullish argument is about Oracle Corporation’s ability to convert its enormous backlog into revenue without funding the entire infrastructure buildout itself. The company booked more than $30 billion of additional AI cloud contracts during the quarter, lifting RPO to $664 billion. Management expects roughly half of the RPO to convert into revenue over the next 36 months. Cramer said, “The scale of the opportunity here has changed dramatically.”
The financing picture also improved. The company reported $28.499 billion of capital expenditures but received $11.363 billion of customer prepayments with a significant financing component. Its supplemental calculation put net cash outlay for CapEx at $17.966 billion. Oracle also completed its previously announced $20 billion at-the-market equity offering. The company expects fiscal 2027 revenue of at least $90 billion and non-GAAP EPS of $8.10. For the current quarter, it expects revenue growth of 30% to 34% and cloud-revenue growth of 65% to 71%.
Bear Case Still Rests on Cash Flow
Cramer also made clear why investors remain skeptical. He said, “The bears still have plenty of ammunition,” as he pointed to Oracle Corporation’s cash burn, capital requirements, and dependence on major AI customers. The company generated $23.1 billion of operating cash flow in the quarter, but free cash flow remained negative at $5.4 billion after $28.499 billion of CapEx. Management expects $90 billion to $95 billion of gross CapEx for fiscal 2027 but no more than $70 billion of net cash CapEx after financing offsets, and has not provided a timetable for returning to positive free cash flow. Margin pressure adds another concern. The company needs its rapidly expanding cloud business to generate enough incremental profit and cash flow to justify the scale of its investment.
Cramer also highlighted Oracle’s exposure to OpenAI and the broader question of whether AI infrastructure demand will remain strong enough to justify the spending. The $664 billion RPO represents contracted business, but it still has to be converted into revenue and ultimately cash flow. It is worth noting that Cramer added:
However, the valuation reflects these doubts. The stock now trades at less than 19 times this year’s earnings estimates and less than 14 times next year’s numbers. That’s an absurdly low price-to-earnings multiple for a company with 30% revenue growth. Unless, of course, you don’t believe or you think that this data center boom is going to end.
Hedge Funds Remain Engaged
According to Insider Monkey, which tracks more than 1,000 hedge funds, 119 hedge funds held ORCL shares in the second quarter, up from 115 in the first quarter. The increase indicates that hedge-fund exposure remained broadly intact despite the stock’s volatility. Additionally, Fisher Asset Management was the top shareholder in Q2 and increased its position by 39% to 13.26 million shares. Short interest remains relatively low, as it stood at approximately 2.6% of the public float.
For investors considering Oracle Corporation, it is important to gauge whether the company’s massive AI backlog can translate into revenue and cash flow quickly enough to justify the capital required to fulfill it. Cramer remains constructive, as he said:
In the end, I came away from this Oracle quarter feeling more constructive about the company’s future than I did in a long time. This was a calm, reassuring, almost normal call from a company delivering capacity, collecting customer money, and keeping its spending forecast under control. I think the stock has a lot of room to recover here. Although with the data center becoming political football, you might want to stay on the sidelines until after the election. But as long as Oracle keeps delivering like this, I’m actually not too worried about its future.
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