Oracle (ORCL) Stock Plunges 10% Despite Earnings Beat on $40B Fundraising Plan

Key Takeaways

• Oracle surpassed Q4 expectations with adjusted EPS of $2.03 versus $1.96 forecasted, while revenue reached $19.18 billion against $19.10 billion anticipated
• Shares plummeted approximately 10% in after-hours trading following the company’s disclosure of a $40 billion fundraising initiative through debt and equity in fiscal 2027
• Cloud infrastructure sales skyrocketed 93% year-over-year to $5.8 billion, though legacy software revenue declined 2%
• The company’s remaining performance obligation (RPO) soared 363% to $638 billion, with over half attributed to a single long-term agreement with OpenAI
• Fiscal 2027 capital expenditures are projected to reach approximately $70 billion, following a negative free cash flow of $23.7 billion in fiscal 2026

Oracle exceeded analyst expectations for both the top and bottom lines in its fiscal fourth quarter results, yet investors weren’t impressed. The stock tumbled roughly 10% during extended trading hours following the company’s disclosure of plans to secure an additional $40 billion in capital to finance its aggressive AI infrastructure expansion.

Oracle Corporation, ORCL

Shares had closed Wednesday’s regular session with a modest 3% gain year-to-date, trailing the S&P 500’s 6% advance.

In the quarter that concluded on May 31, Oracle delivered adjusted earnings per share of $2.03, topping the $1.96 Street consensus. Revenue totaled $19.18 billion, marginally exceeding the $19.10 billion forecast, representing a 21% year-over-year increase.

Net income climbed to $4.22 billion, equivalent to $1.45 per share, compared to $3.43 billion in the prior-year period.

Cloud Shines While Software Struggles

Oracle Cloud Infrastructure sales exploded 93% to reach $5.8 billion, continuing the robust growth trajectory established over recent quarters.

However, the company’s traditional software business — historically its core strength — is showing signs of weakness. Revenue from legacy software products dropped 2%, while cloud software also underperformed expectations. Total software revenue inched up just 2% to $11 billion.

The enterprise software giant reaffirmed its fiscal 2027 revenue objective of $90 billion and upgraded its adjusted EPS projection to $8.05, surpassing the $8.01 analyst estimate. For the first quarter, management guided toward 27% to 29% revenue expansion and adjusted EPS between $1.72 and $1.76, both marginally above Wall Street expectations.

Massive Capital Deployment Continues

Oracle disclosed that it secured $43 billion through debt issuance and $5 billion via equity offerings throughout fiscal 2026. The company now intends to raise an additional $40 billion in fiscal 2027 — including a previously announced $20 billion share offering.

Capital spending surged 162% to $55.7 billion in fiscal 2026, with projections pointing toward approximately $70 billion in fiscal 2027 — this excludes $20 billion to $25 billion in direct customer prepayments.

Free cash flow registered at negative $23.7 billion for the fiscal year, while depreciation expenses nearly doubled to $7.62 billion.

The company’s RPO — representing contracted revenue yet to be recognized — jumped 363% to $638 billion. Bank of America analysts highlighted that more than half of this massive backlog stems from a single customer: OpenAI.

Oracle also disclosed plans to activate nearly one gigawatt of computing capacity during the current quarter — approximately matching its entire fiscal 2026 deployment.

During the reporting period, Oracle appointed Hilary Maxson, previously with Schneider Electric, as its new Chief Financial Officer. In related developments, Digital and Blackstone jointly announced $16 billion in financing for a new Oracle data center facility in Michigan.

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