Oracle says AI will save it from the SaaSpocalypse, not bring it on

Oracle spent its latest earnings call trying to make a simple case: AI is not the end of packaged software, but a way to sell more of it. Co-CEO Mike Sicilia used his first remarks on the company’s Q1 FY 2027 call to argue that the software industry’s basic bet still holds. Systems work, he said, because they standardize business processes. AI, in his telling, just removes some of the friction that made those systems hard to live with.

That’s the key shift. Instead of forcing every worker to follow a workflow exactly as the software demands, Oracle wants AI agents to handle the routine parts, while employees step in for exceptions and judgment calls. Sicilia said Oracle is confident that this setup can deliver faster ROI for customers. He also said that in October the company will launch an “agentic AI accelerator” meant to automate and orchestrate implementation at a scale he described as unprecedented, cutting SaaS deployments from years to months and from months to weeks.

There’s a second pitch buried in the same argument. Oracle says its SaaS business doesn’t just make money on its own; it also feeds the infrastructure side. The numbers help the story. SaaS grew 10 percent, even as software revenue slipped 3 percent to $5.5 billion. Oracle’s cloud business did much better, with revenue up 60 percent year over year to $11.6 billion.

Analysts on the call pressed the company on whether its huge spending on datacenters and AI infrastructure is actually paying off. Co-CEO Clay Magouyrk said Oracle is “constantly finding interesting ways to fund the business” and pointed to customers paying up for AI capacity. He said GPUs that came up for renewal in Q1 were renewed or resold at a 20 percent premium to prior contracts, and noted that most of those GPUs were four years or older.

Oracle did not pretend the buildout is perfectly smooth. Magouyrk said some datacenter projects are moving faster than others, which makes precise revenue timing impossible. Still, the company turned on 850 MW of new datacenter capacity in the quarter and forecast full-year earnings per share of $8.10, up five cents, on revenue of at least $90 billion. The market initially liked the message: shares jumped 7 percent after hours before settling back, and the stock is still down 21 percent over the year and 38 percent below its June peak.