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

Oracle's co-CEO, Mike Sicilia, defended the company's applications business during the Q1 FY 2027 earnings call, stating that AI serves as an accelerator, not a replacement for packaged applications. He explained that AI agents can execute tasks using established workflows and business rules, allowing employees to focus on overseeing agents and applying human judgment when necessary.

This shift in approach could lead to rapid return on investment (ROI) for customers, according to Sicilia, who also announced an "agentic AI accelerator" to be unveiled in October, promising to automate and orchestrate SaaS deployments at unprecedented speed.

Oracle's applications business is also a significant driver of demand for the company's infrastructure-as-a-service (IaaS) offerings. Salesforce has already integrated an AI interface into its CRM platform, and Oracle plans to do the same. The company's cloud business grew 60 percent year-over-year to $11.6 billion, while its software revenue saw a three percent decline to $5.5 billion.

Despite this, Oracle's datacenter investments remain strong, with datacenter revenue up 850 MW in the quarter, and analysts expect earnings per share to rise five cents to $8.10 on revenue of at least $90 billion for the full year.

While Oracle's investments in AI infrastructure and datacenters have shown promise, the co-CEO acknowledged that some projects are progressing faster than others, making precise predictions about revenue generation challenging. He emphasized that an all-or-nothing approach to large-scale infrastructure development is a "bad plan" and that the company is taking precautions against such risks.

Despite a year-over-year stock decline of 21 percent, and being 38 percent below its June peak, Oracle's shares experienced a seven percent increase in after-hours trading following the earnings call, reflecting investor confidence in the company's AI-driven strategy.