Despite reporting quarterly revenue and profit that exceeded market expectations, Oracle (ORCL) shares suffered their largest single-day decline since January 2025.
The software giant announced plans to raise a combined $40 billion through debt and equity financing, which includes a previously disclosed $20 billion stock offering.
Adding to investor concerns, the company reported negative free cash flow for its fiscal year, with a deficit reaching $23.7 billion.
On September 23, 2025, following the news of the negative cash flow and the additional $20 billion share sale, Oracle stock plunged 11%. This marked its worst daily performance in over a year and a half.
After Thursday's steep drop, Oracle's year-to-date performance turned negative, with shares down roughly 8%, significantly underperforming the Nasdaq Composite Index, which has gained about 9% this year.
Strong Quarterly Results
Data from London Stock Exchange Group shows Oracle's fiscal fourth-quarter results surpassed analyst consensus estimates.
Revenue surged 21% year-over-year to $19.18 billion, beating the average estimate of $19.1 billion.
Adjusted earnings per share came in at $2.03, higher than the expected $1.96.
However, investor focus remained on the company's heavy spending on artificial intelligence infrastructure, raising doubts about whether these massive investments will translate into profit growth. The key pressure point was the $23.7 billion free cash flow shortfall for the last fiscal year.
Substantial Financing Plans
Oracle stated its intention to raise a total of $40 billion via debt and equity, incorporating the previously announced $20 billion stock sale. For the 2026 fiscal year, the company has already secured $43 billion in debt financing and $5 billion in equity financing.
Capital expenditures skyrocketed 162% year-over-year to $55.7 billion. New Chief Financial Officer Hillary Maxson indicated that net cash capital expenditures for fiscal 2027 are projected to be around $70 billion. This figure does not include $20 to $25 billion in customer prepayments.
Fiscal 2027 Outlook
The company maintained its previous revenue target of $90 billion for the full 2027 fiscal year.
It raised its adjusted earnings per share guidance to $8.05, above the prior market consensus of $8.01 per share on revenue of $88.9 billion.
An analyst from Piper Sandler noted in a Wednesday evening report that while market sentiment on the stock remains divided, they are optimistic about customer payment growth driven by AI business and maintain a buy rating on the shares.
First Quarter Fiscal 2027 Guidance
Oracle provided the following range for the upcoming quarter:
Adjusted earnings per share between $1.72 and $1.76.
Revenue growth of 27% to 29% year-over-year.
Analyst estimates compiled by LSEG were for earnings per share of $1.68 and revenue of $19.06 billion, implying growth of about 28%, indicating the company's guidance is generally better than market expectations.
Cloud Business Surges
Cloud infrastructure revenue soared 93% year-over-year to $5.8 billion.
As of May 31, the company's remaining performance obligations, which include contracted revenue not yet recognized, stood at $638 billion, a 363% increase. This exceeded the market expectation of $595.67 billion compiled by StreetAccount.
Analysts at Bank of America reiterated their buy rating on Oracle, noting that over half of the company's remaining performance obligations are linked to OpenAI. The two companies are partners in the U.S. domestic AI infrastructure project known as "Stargate."
During an analyst call, Oracle CEO Clay Magouyrk revealed the company plans to bring nearly 1 gigawatt of computing capacity online this quarter, a scale roughly equivalent to the total capacity deployed in the entire 2026 fiscal year.
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