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Oracle reported a record quarter as massive demand for AI infrastructure pushed revenue growth to +30% YoY. Cloud revenue increased +62% to $11.6 billion, while the company delivered 850 megawatts of additional data center capacity during the quarter.

Cloud Infrastructure remained the growth engine, with IaaS revenue surging +121% YoY to $7.4 billion. Cloud Applications revenue increased +10% to $4.2 billion, while traditional Software revenue declined -3% to $5.55 billion as customers continued migrating workloads from on-premise products to Oracle Cloud. Hardware revenue increased +15% to $774.0 million and Services grew +5% to $1.41 billion.

Oracle signed more than $30.0 billion of additional AI cloud contracts during the quarter, lifting remaining performance obligations to $664.0 billion. The company also delivered more than 300,000 GPUs to AI cloud customers, nearly tripling the capacity delivered during the previous quarter. Management expects roughly half of its RPO to convert into revenue over the next 36 months and believes Cloud Infrastructure growth will continue accelerating throughout fiscal 2027.

The tradeoff remains the enormous amount of capital required to satisfy that demand. Oracle generated a record $23.1 billion of operating cash flow but spent $28.5 billion on capital expenditures, resulting in negative free cash flow of $5.4 billion. Management still expects $90.0 billion to $95.0 billion of full-year capital expenditures, although many newer AI contracts use customer prepayments, supplier financing or bring-your-own-hardware structures to reduce the amount of incremental cash Oracle itself needs to provide. Management also noted that AI infrastructure capacity coming up for renewal is achieving prices roughly 20% higher, reinforcing both the scarcity and economics of the business.

Looking ahead, management expects second-quarter revenue growth between 30% and 34% alongside Cloud revenue growth between 65% and 71%. Oracle also raised its full-year fiscal 2027 outlook to at least $90.0 billion in revenue.

Long ORCL!

Adobe reported record quarterly revenue as continued strength across Creative Cloud, Acrobat and its enterprise products combined with accelerating adoption of its AI offerings. Total subscription revenue reached $6.56 billion, up 14% YoY, while total ARR climbed to $27.5 billion.

Business Professionals & Consumers subscription revenue increased 16% YoY to $1.91 billion, supported by strong growth across Acrobat and Express. Monthly active users across the segment exceeded 900 million, growing more than 25%, while Acrobat AI Assistant users doubled sequentially. Creative & Marketing Professionals subscription revenue increased 13% to $4.65 billion, with continued strength across Creative Cloud Teams and Enterprise.

AI adoption continued to accelerate across the portfolio. Adobe's AI-first ARR exceeded $650.0 million, growing more than 150% YoY, while total monthly active users across the company surpassed 1.0 billion. Creative freemium users crossed 100 million and grew more than 70%, while Firefly ARR across Firefly Apps and credit packs increased 40% sequentially. Several of Adobe's enterprise AI products, including Experience Manager, GenStudio and Experience Platform, also posted more than 20% ARR growth.

Management emphasized that AI is expanding Adobe's addressable audience through a broader freemium strategy while creating new opportunities to convert users into higher-value paid customers. Adobe is increasingly embedding conversational and agentic capabilities across Acrobat, Express, Photoshop, Premiere and its enterprise experience products, while extending Acrobat onto platforms including ChatGPT, Claude and Microsoft Edge. The company also announced that Anil Chakravarthy will become CEO on December 1, with Shantanu Narayen transitioning to executive chair.

Looking ahead, management expects fourth-quarter revenue between $6.80 billion and $6.85 billion. Adobe also raised its full-year revenue outlook to between $26.576 billion and $26.626 billion and now expects total ending ARR to grow 10.2% for fiscal 2026.

No position.

Kroger reported a resilient quarter as improving eCommerce profitability, retail media growth and disciplined cost management helped offset a challenging sales environment. Total revenue increased 2% YoY to $34.6 billion, while identical sales excluding fuel increased just 0.2%.

The company's digital businesses were a major bright spot. Adjusted eCommerce sales grew 20% and delivered a second consecutive quarter of profitable growth, while Kroger Precision Marketing profit increased 24%, its strongest performance in roughly five years.

Underlying sales were pressured by several unusual headwinds. Changes stemming from the Inflation Reduction Act reduced identical sales by roughly 140 basis points, the shift from branded to generic prescriptions created another 60-basis-point headwind, egg deflation accounted for roughly 30 basis points, and a Cyclospora outbreak reduced sales by another 35 basis points as customers pulled back across produce. Together, management said these factors represented roughly 265 basis points of pressure during the quarter.

Management focused heavily on improving Kroger's value proposition while using cost savings to fund lower prices without sacrificing profitability. Gross margin excluding fuel, rent, depreciation and amortization increased 13 basis points, supported by improving eCommerce economics, retail media, pharmacy mix and sourcing initiatives. CEO Greg Foran also noted that Kroger continued gaining share relative to its traditional grocery competitors despite the softer top-line environment.

Looking ahead, management lowered full-year identical sales excluding fuel guidance to between 0.2% and 0.8%, down from 1.0% to 2.0%, reflecting continued pharmacy and consumer headwinds. Kroger maintained operating profit guidance between $5.0 billion and $5.2 billion — demonstrating confidence that cost savings, eCommerce profitability and retail media growth can continue supporting earnings despite softer sales.

Long KR.

“When Apple puts all the focus on the last quarter of the year, of course that generates quite strong revenues, but they were missing when the second quarter comes along with much lower sales. I think this will give them some stability in terms of balancing the revenues throughout the year.”