Oracle Japan stock jumped about 8% on Friday after record first-quarter revenue and profit, while its US parent fell in New York.
The Japanese unit traded around ¥9,847, up 7.7%, after earlier touching ¥10,040. Revenue rose 13% to ¥74.86 billion, while cloud revenue climbed 31.7% and operating profit increased 22.7%.
Oracle Corp, meanwhile, fell 3.47% on Thursday to $139.54 as Project Jupiter concerns revived questions over execution and financing.
Oracle Japan is converting cloud growth into profit
Oracle Japan’s first-quarter numbers gave investors a relatively clean earnings story. Cloud revenue reached about ¥25.14 billion, about a third of sales, while operating income rose to ¥25.92 billion. Net income increased 23.2% to ¥18.25 billion.
The more important change was operating leverage. Operating profit grew materially faster than revenue, lifting the operating margin to about 34.6% from roughly 31.9% a year earlier.
That means investors can already see faster cloud adoption feeding through to profitability rather than relying mainly on distant assumptions about future demand.
Cloud revenue grew more than twice as fast as the overall business. For shareholders, the equation is straightforward: cloud revenue is expanding quickly, margins are improving and profits are rising materially faster than sales.
Oracle Corp faces the cost of building capacity
The US parent has a different problem. Demand is hardly weak.
Oracle’s latest quarter delivered 30% total revenue growth, 62% cloud revenue growth and a 121% jump in cloud-infrastructure revenue.
Remaining performance obligations reached $664 billion, showing how much contracted business sits ahead.
But free cash flow was negative $5 billion as Oracle continued spending heavily on data-centre capacity.
eToro strategist Lale Akoner told Reuters earlier this month that Oracle’s problem “has not been finding customers, but proving that its enormous data centre build-out can eventually generate enough cash to justify the cost.”
Thursday revived that concern, as Bloomberg reported that Oracle had sent Project Jupiter’s developer a force majeure notice designed to protect the company from payments if the New Mexico facility misses its planned 2028 start. Oracle has said it does not expect a delay.
Wall Street still sees upside in the parent
That does not mean analysts have abandoned Oracle Corp.
Stifel analyst Brad Reback reiterated a Buy rating and $200 target after the Project Jupiter report, saying the firm viewed the force-majeure language as “a precautionary preservation of rights” rather than evidence Oracle was walking away from the project.
UBS analyst Karl Keirstead has also argued that “material risk is already priced into the stock.” UBS maintains a Buy rating and most recently raised its Oracle target to $250.
Keirstead acknowledges concerns around AI capital spending, credit markets, customer concentration and Project Jupiter, but believes some of those risks may be overstated.
That is the real disagreement, as few investors doubt that Oracle’s cloud opportunity is large.
The debate is over how much capital it will require, how quickly new capacity can become revenue-generating and whether cash returns arrive soon enough to justify the spending.
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