Oracle beat Wall Street expectations on revenue and profit, but investors balked at a new $40 billion financing plan for its AI buildout
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Shares of Oracle $ORCL dropped roughly 10% in after-hours trading Wednesday after the company announced plans to raise approximately $40 billion in new financing for its AI data center buildout, even as fourth-quarter revenue of $19.2 billion came in 21% above the prior-year period and the company lifted its profit outlook for fiscal 2027.
Against Wall Street's consensus of $1.96 per share, adjusted EPS of $2.03 came in ahead of the mark, according to CNBC. Quarterly revenue of $19.18 billion similarly cleared the $19.10 billion consensus.
Cloud infrastructure revenue was the standout, rising 93% to $5.8 billion in the quarter. Total cloud revenue, which combines infrastructure and software-as-a-service, climbed 47% to $9.9 billion. The company attributed a 2% decline in software revenue to $6.8 billion to an ongoing shift by customers away from on-premises deployments toward cloud-based alternatives.
Over the full fiscal year 2026, Oracle posted total revenue of $67.4 billion, a 17% gain, with operating cash flow rising 54% to $32 billion. Spending on capital expenditures surged to $55.7 billion from $21.2 billion in fiscal 2025, and the heavy investment left free cash flow at negative $23.7 billion.
The financing announcement drove investor concern. Having already tapped capital markets for $43 billion in debt and $5 billion in equity during fiscal 2026, Oracle said it intends to secure roughly $40 billion more in fiscal 2027 through a mix of debt and equity, layered on top of a $20 billion at-the-market equity program the company had previously disclosed. Oracle said it does not expect to issue additional debt in calendar year 2026.
On the analyst call, CFO Hilary Maxson put the company's expected net capital expenditure spend in fiscal 2027 at roughly $70 billion, a figure that sets aside between $20 billion and $25 billion in customer prepayments.
At $638 billion as of quarter end, Oracle's remaining performance obligations — a forward-looking measure of contracted revenue — had grown 363% from a year earlier. Driving that figure were sizable AI contracts signed in recent quarters, many of which involved customers either handing over their own GPU hardware or paying Oracle upfront for GPU procurement, the company disclosed. Those prepaid and customer-supplied hardware portions total $75 billion, which Oracle said reduces the capital it needs to raise for data center construction.
For the current fiscal first quarter, Oracle guided for revenue growth of 27% to 29% and adjusted earnings per share of $1.72 to $1.76. Oracle left its fiscal 2027 full-year revenue goal of $90 billion intact while nudging its adjusted EPS target higher to $8.05.
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