Oracle (ORCL) Shares Fall Despite Earnings Beat as AI Infrastructure Spending Surges

Oracle Corporation (NYSE: ORCL) reported fiscal fourth-quarter results that exceeded Wall Street expectations on revenue and earnings, but shares declined in after-hours trading after the company unveiled plans for massive new financing and significantly higher artificial intelligence infrastructure spending.

The cloud computing giant reported revenue of $19.18 billion for the quarter ended May 31, up 21% from the same period a year earlier. Adjusted earnings per share came in above analyst estimates, while net income rose to $4.22 billion from $3.43 billion a year ago.

Despite the strong earnings performance, investors focused on Oracle’s ambitious spending plans as the company continues expanding its cloud and AI infrastructure business.

Oracle Plans Up to $95 Billion in Capital Spending

Oracle said it expects fiscal 2027 capital expenditures to reach as much as $95 billion, significantly above market expectations and far higher than the approximately $55.7 billion spent during fiscal 2026.

Company executives indicated that a portion of those expenditures could be offset by customer reimbursements and prepayments, reducing Oracle’s net cash outlay. Even so, Oracle expects its own spending commitments to remain substantial as demand for AI computing capacity continues to accelerate.

To support those investments, Oracle announced plans to raise approximately $40 billion through a combination of debt and equity financing. The figure includes a previously announced $20 billion share issuance program.

The financing plans raised concerns among some investors, contributing to a decline in Oracle shares following the earnings release.

AI Demand Continues to Accelerate

Management pointed to strong demand for artificial intelligence infrastructure as a key driver of future growth.

Oracle’s remaining performance obligations (RPO), which measure contracted business yet to be recognized as revenue, surged to $638 billion. The figure significantly exceeded analyst expectations and reflects growing demand for large-scale AI computing services.

The company noted that many of the new contracts involve major AI deployments where customers are helping fund infrastructure through prepayments or hardware purchases.

Industry analysts estimate that a significant portion of Oracle’s contracted backlog is tied to OpenAI, one of the company’s largest cloud customers.

Cloud Business Remains Growth Engine

Oracle’s cloud segment continued to deliver strong growth during the quarter.

Total cloud revenue increased 47% year-over-year to nearly $10 billion. Cloud infrastructure revenue, which includes AI-related computing services, jumped 93% to approximately $5.8 billion.

The company has increasingly positioned itself as a major challenger to cloud leaders Amazon Web Services and Microsoft Azure by aggressively expanding data center capacity and pursuing large AI contracts.

Oracle executives said they expect to bring nearly one gigawatt of new computing capacity online during the current quarter, roughly matching the amount deployed throughout the previous fiscal year.

Stargate Project Advances

Management also provided an update on the massive Stargate data center project in Texas, which Oracle is developing alongside OpenAI and other partners.

Executives said the facility is expected to be more than 75% complete within the next three months. The project is viewed as a critical component of Oracle’s strategy to become a leading provider of AI infrastructure.

OpenAI recently announced that customers will soon be able to access advanced AI coding models through Oracle’s cloud platform, further strengthening the relationship between the two companies.

Fiscal 2027 Outlook

Oracle maintained its fiscal 2027 revenue target of approximately $90 billion and increased its earnings outlook.

The company now expects adjusted earnings per share of approximately $8.05 for fiscal 2027, slightly above previous guidance and ahead of analyst forecasts.

For the current quarter, Oracle projected revenue growth of 27% to 29% and earnings above Wall Street expectations.

Investor Concerns Remain

While investors generally welcomed Oracle’s accelerating revenue growth and expanding AI backlog, concerns remain about the scale of investment required to compete in the AI infrastructure race.

Oracle generated negative free cash flow during fiscal 2026 as spending on data centers, GPUs, and cloud infrastructure surged.

Market participants continue to debate whether long-term demand for AI computing services will justify the industry’s enormous capital expenditures.

Nevertheless, Oracle’s management remains confident that growing enterprise adoption of artificial intelligence will continue driving demand for cloud infrastructure and position the company for substantial growth in the years ahead.