Oracle shares fell about 10 percent in extended trading Wednesday after the company beat Wall Street's fourth-quarter estimates and then told investors it intends to raise another $40 billion to keep building artificial-intelligence data centers, including a $20 billion share sale already announced.
The drop, after a quarter in which revenue rose 21 percent and adjusted earnings beat consensus, captured the question hanging over the AI trade: whether the customers prepaying Oracle for graphics processors can ultimately justify the bill. Capital expenditures jumped 162 percent in fiscal 2026 to $55.7 billion, and free cash flow ran $23.7 billion in the red.
What the quarter showed
Oracle posted net income of $4.22 billion, or $1.45 per share, up from $3.43 billion, or $1.19, a year earlier, according to a company statement. The company lifted its adjusted earnings forecast for fiscal 2027 to $8.05 per share and kept its $90 billion revenue guidance, both above LSEG consensus.
Cloud infrastructure revenue rose 93 percent to $5.8 billion, still a fraction of the $37.59 billion Amazon Web Services posted in the March quarter. Remaining performance obligations — bookings not yet recognized as revenue — climbed 363 percent to $638 billion, well above the $595.67 billion StreetAccount consensus. Bank of America analysts said more than 50 percent of that backlog comes from OpenAI.
The financing plan
Oracle raised $43 billion in debt and $5 billion in equity in fiscal 2026 and now plans another $40 billion across the two markets. Net capital spending in fiscal 2027 will run about $70 billion, new finance chief Hilary Maxson said on the earnings call, excluding $20 billion to $25 billion in customer prepayments. Chief Executive Clay Magouyrk said the company aims to bring nearly one gigawatt of computing capacity online in the current quarter, matching the total it added in all of fiscal 2026.
The wider unease
The Oracle decision lands as investors are already pulling back from the AI infrastructure trade. The VanEck Semiconductor ETF is down more than 10 percent from a record high reached last week, and options traders bought four times as many puts as calls on Tuesday, with $260 million of the roughly $350 million in premium tied to bearish bets, according to SpotGamma data cited by CNBC.
KKR, in a mid-year report distributed Thursday, told clients the AI productivity boom is not over but warned that competition will make growth "more concentrated across fewer industries and, at times, more extreme than anything we have seen since the start of the second industrial revolution in the 1870s," wrote Henry McVey, the firm's head of global macro. McVey described a market in which technology, high-end services and government spending are "enormously concentrated" while other sectors go "starved."
The counterpoint
Left- and right-leaning outlets had not weighed in on Oracle's spending plans by press time, leaving the wires and market desks as the only available frame. Bank of America still recommends buying the shares, and Oracle says customer prepayments and customer-supplied GPUs reduce the cash it will need to build out the sites itself.
Oracle's stock is up 3 percent in 2026, trailing a 6 percent gain in the S&P 500. The company's fiscal first-quarter guidance calls for revenue growth of 27 to 29 percent.