Oracle’s second-quarter fiscal 2026 results showed mixed performance, with shares falling 11% pre-market despite strong cloud growth and record backlog. Revenues were $16.1 billion, up 14% in U.S. dollars. Cloud revenues reached $8 billion, accounting for half of total revenues. Software revenues declined 3%. RPO increased to $523 billion.

Free cash flow was negative $10 billion due to high capital expenditures of $12 billion. Non-GAAP earnings per share were $2.26, up 54%. Full-year CapEx guidance was raised to $50 billion. The Zacks Consensus Estimate for fiscal 2026 earnings is $6.81 per share, up 12.94% from fiscal 2025.

For the fiscal third quarter, Oracle expects total cloud revenue growth of 37-41% in constant currency and total revenue growth of 16-18%. Non-GAAP earnings per share guidance is $1.70 to $1.74. The company is focusing on its AI data platform and multicloud database partnerships.

Oracle competes in the cloud infrastructure market with Amazon Web Services, Microsoft Azure, and Google Cloud. ORCL stock is trading at a premium with a forward Price/Sales ratio of 8.42x. Given competition and valuation, current investors should hold positions while new buyers wait for improved entry points.

The next phase of the AI boom presents opportunities for investors. Zacks’ AI Boom 2.0 report highlights 4 under-the-radar companies at the forefront of AI innovation. Oracle shares plunged 11% post-results, warranting caution for investors. The company’s stock currently carries a Zacks Rank #3 (Hold).

Read more at Nasdaq: Oracle Shares Plunge 11% After Q2 Revenues Miss: Should You Hold?