Oracle stock slides after company unveils soaring AI spending

Oracle shares fell sharply on Thursday after the company reported strong fiscal fourth-quarter results but laid out a much larger spending plan tied to its AI infrastructure buildout.

The stock was down about 9% to 12% in early and premarket trading, depending on the session and timing, as investors reacted less to the quarter's revenue beat than to the cost of expanding Oracle's cloud and AI capacity.

Strong quarter, harsh market reaction

Oracle said fiscal fourth-quarter revenue was about $19.2 billion, up 21% from a year earlier and above Wall Street expectations. Adjusted earnings per share were $2.11, also ahead of estimates.

The cloud business was the standout. Oracle Cloud Infrastructure revenue rose 93% year over year to about $5.8 billion, while total cloud revenue increased 47% to about $9.9 billion.

That was enough to show that demand for Oracle's cloud and AI services remains strong. It was not enough to calm investors who are now focused on how expensive it will be to keep building the underlying infrastructure.

Spending surge

Oracle said fiscal 2026 capital expenditures reached about $55.66 billion to $55.7 billion, a steep increase from the prior year and above what many analysts had expected.

The company then forecast about $70 billion in net cash outlay for fiscal 2027 capex. In one report, Chief Financial Officer Hillary Maxson said that figure could ultimately run another $20 billion to $25 billion higher depending on prepayments and customer-related factors.

Oracle is also preparing additional financing, with one report saying the company expects to raise about $40 billion in fiscal 2027 through debt and equity. Investors appear to be weighing those funding needs against the pace at which the new infrastructure will generate profit.

Guidance and backlog

Another point of disappointment was Oracle's decision to keep its fiscal 2027 revenue target at $90 billion rather than raise it after a strong quarter.

That mattered because the company is still posting rapid growth, especially in cloud, and some investors had hoped for a more aggressive signal about the next phase of expansion.

At the same time, Oracle's remaining performance obligations reached about $638 billion, a record backlog that was driven largely by large AI contracts. The backlog shows how much demand the company says it has already locked in, but it also raises the question of how quickly those commitments will turn into revenue.

What investors are watching

The stock reaction suggests the market is reassessing the economics of AI infrastructure spending across the sector, not just at Oracle.

For Oracle, the immediate questions are whether customer prepayments can offset some of the cash burden, whether the company will refine its capex cadence in coming quarters, and how quickly the backlog can convert into sales.

The company has positioned itself as a major AI infrastructure provider, but the latest results show that investors will demand clearer evidence that the spending will produce acceptable returns and margins.

That leaves Oracle with a familiar but difficult task: keep scaling capacity to meet demand while convincing the market that the investment will pay off on a timetable that supports the stock.