Oracle shares tumbled 11% on Thursday, heading for their worst day since January 2025, after the software maker announced plans for an additional $20 billion capital raise and reported negative free cash flow of $23.7 billion for the fiscal year. The stock drop followed the company's fiscal fourth quarter earnings report, which beat analyst estimates on revenue and earnings but raised concerns among investors about whether Oracle's massive AI infrastructure spending will translate into profit growth. The decline reflects ongoing market scrutiny of Oracle's capital-intensive AI buildout strategy, as the company continues to invest heavily in cloud computing capacity.
With Thursday's drop, Oracle stock is now down approximately 8% for the year, trailing the Nasdaq index, which has gained about 9% over the same period.
Oracle Reports Q4 Revenue Beat Despite Stock Decline
For the fiscal fourth quarter, Oracle reported revenue of $19.18 billion, representing a 21% increase and exceeding the $19.1 billion average analyst estimate according to LSEG. Adjusted earnings per share came in at $2.03, surpassing the $1.96 average estimate.
Oracle Plans $40 Billion Capital Raise Amid Negative Cash Flow
Oracle announced plans to raise $40 billion through debt and equity financing, which includes a $20 billion share sale announced earlier. This follows the company's fiscal 2026 capital raises of $43 billion in debt and $5 billion in equity.
Capital expenditures jumped 162% to $55.7 billion. New CFO Hilary Maxson stated that net cash outlay for capex in fiscal 2027 will be around $70 billion, excluding $20 billion to $25 billion in prepayments from customers. The company's free cash flow for the last fiscal year came in at negative $23.7 billion.
Analysts at Piper Sandler wrote in a report late Wednesday that they believe Oracle will remain debated but are constructive on the company's AI-driven consumption growth, recommending buying the stock.
Oracle Maintains $90 Billion Revenue Guidance for Fiscal 2027
Oracle maintained its previous revenue guidance of $90 billion for the 2027 fiscal year while lifting its forecast of adjusted earnings per share to $8.05. Analysts had been projecting $8.01 per share and $88.9 billion in revenue.
For the fiscal first quarter, Oracle called for $1.72 to $1.76 in adjusted earnings per share, with 27% to 29% revenue growth. Analysts polled by LSEG had been expecting $1.68 in adjusted earnings per share, along with $19.06 billion in revenue, implying about 28% growth.
Oracle Cloud Infrastructure Revenue Surges 93%
Cloud infrastructure revenue jumped 93% to $5.8 billion. The company's remaining performance obligation, which includes revenue that hasn't been recognized, reached $638 billion on May 31, up 363%. Analysts polled by StreetAccount had been looking for $595.67 billion.
Bank of America analysts, who recommend buying Oracle shares, said over 50% of the remaining performance obligation comes from OpenAI. The companies are partners in the Stargate project, an effort to develop AI infrastructure in the U.S.
CEO Clay Magouyrk stated on a conference call with analysts that Oracle is looking to bring online almost one gigawatt worth of computing power in the current quarter, roughly the total for fiscal 2026.
FAQ
Why did Oracle shares fall 11% on Thursday?
Oracle shares fell 11% after the company announced an additional $20 billion capital raise and reported negative free cash flow of $23.7 billion for the fiscal year, raising investor concerns about whether massive AI infrastructure spending will translate into profit growth despite beating quarterly earnings estimates.
What is Oracle's revenue guidance for fiscal 2027?
Oracle maintained its revenue guidance of $90 billion for fiscal 2027 and raised its adjusted earnings per share forecast to $8.05, up from the previous analyst consensus of $8.01 per share.
