SAP (NYSE:SAP) shares fell more than 4% after competitor Oracle (NYSE:ORCL) revealed fiscal 2027 capital expenditure plans that significantly exceeded analyst expectations, highlighting the escalating costs associated with competing in the artificial intelligence infrastructure market.
Oracle’s shares dropped more than 10% in premarket trading on Thursday after the company announced it could spend as much as $95 billion on capital projects during fiscal 2027. Oracle said it expects to recoup up to $25 billion of that amount through customer repayments. According to LSEG data, analysts had projected capital spending of approximately $67.7 billion.
The company also disclosed plans to secure nearly $40 billion in financing through a combination of debt and equity issuance during 2027, including a previously announced $20 billion at-the-market share offering.
AI Infrastructure Race Drives Massive Spending
Oracle’s plans underscore the substantial financial commitments required to compete in the rapidly expanding AI infrastructure sector.
Having secured major data-centre agreements with customers including Meta Platforms and OpenAI, Oracle is increasingly positioning itself as a credible challenger to cloud-computing leaders Amazon and Microsoft. Its spending levels are now approaching those of the industry’s largest players.
During the earnings call, Chief Financial Officer Hilary Maxson told analysts that roughly $70 billion of the projected fiscal 2027 investment would come directly from Oracle, while the remainder is expected to be reimbursed by customers. She did not provide a timetable for those repayments.
Maxson also warned that gross margins would “step down” during the current fiscal year as Oracle accelerates the expansion of its global data-centre footprint.
Oracle Continues Heavy Investment Programme
Oracle’s latest spending forecast follows an already significant investment cycle.
The company spent approximately $55.7 billion during fiscal 2026, surpassing its own target of $50 billion. Earlier in the year, Oracle had also outlined plans to raise up to $50 billion through a mix of debt and equity financing to support its growth ambitions.
The scale of the investment programme has intensified scrutiny from investors, who continue to evaluate the balance between growth opportunities and profitability as demand for AI infrastructure accelerates.
Quarterly Results Beat Expectations
Alongside its spending plans, Oracle reported fourth-quarter financial results that exceeded market forecasts.
Revenue for the quarter reached $19.18 billion, slightly ahead of analyst expectations of $19.10 billion. Adjusted earnings came in at $2.03 per share, outperforming the consensus estimate of $1.96 per share.
Cloud services revenue climbed to $9.9 billion during the quarter, representing growth of 46% year-on-year in constant currency terms. Revenue from Oracle Cloud Infrastructure increased 92% to $5.8 billion, reflecting continued demand for AI-related computing capacity.
Meanwhile, total software revenue edged 2% lower in constant currency terms to $6.8 billion.
Despite the stronger-than-expected quarterly performance, investor attention remained focused on the substantial investment and financing requirements needed to support Oracle’s long-term AI strategy, contributing to weakness across parts of the enterprise software sector, including SAP.