Oracle (NYSE:ORCL) reported quarterly earnings and revenue ahead of market forecasts on Wednesday and raised its outlook for annual adjusted earnings per share. Despite the strong operating performance, the stock fell 10.1% in premarket trading on Thursday after investors focused on the company’s aggressive capital spending plans and upcoming financing requirements.
The software giant revealed that it expects to secure approximately $40 billion in funding during fiscal 2027 while significantly increasing investment in its cloud and artificial intelligence infrastructure.
Capital Expenditure Forecast Surprises Investors
Oracle said capital expenditures could reach as much as $95 billion in fiscal 2027, substantially above Wall Street expectations of roughly $67.7 billion, according to LSEG data.
The company noted that up to $25 billion of that spending is expected to be recovered through customer repayments, reducing the net financial burden over time.
During the earnings call, Chief Financial Officer Hilary Maxson explained that around $70 billion of the projected spending would represent Oracle’s own capital investment, while the remainder would eventually be reimbursed by customers. However, she did not provide a timeline for when those repayments would be received.
Maxson also warned that gross margins would “step down” during the current fiscal year as Oracle accelerates construction of additional data centre capacity.
AI Infrastructure Push Continues
The Austin, Texas-based technology company has increasingly shifted its focus toward cloud infrastructure and AI-related services while continuing to generate revenue from its traditional database software and enterprise application businesses.
Investors have closely examined Oracle’s strategy as concerns persist about the long-term impact of artificial intelligence on its legacy software operations.
To strengthen its position in the AI market, Oracle has invested heavily in expanding its data centre footprint and cloud infrastructure capabilities. However, the scale of financing required to support these initiatives has drawn increasing scrutiny from investors.
The company had previously targeted $50 billion in debt and equity financing during fiscal 2026 and ultimately raised $48 billion.
Oracle Plans Additional Financing in Fiscal 2027
Oracle outlined further funding plans as it continues to expand its AI infrastructure network.
“In fiscal year 2027, Oracle expects to raise approximately $40 billion through a combination of debt and equity financing including its previously announced $20 billion at-the-market equity issuance. Oracle does not expect to issue additional debt in calendar year 2026,” the company said in a statement.
The announcement contributed to investor concerns over future leverage and the financial demands associated with Oracle’s rapid expansion strategy.
Strong Quarterly Performance Driven by Cloud Growth
For the fourth quarter of fiscal 2026, Oracle reported adjusted earnings of $2.11 per share on revenue of $19.18 billion.
Analysts had been expecting earnings of $1.95 per share on revenue of $19.10 billion.
Cloud services revenue increased 46% year-on-year in constant currency terms to $9.9 billion, while Oracle Cloud Infrastructure (OCI) revenue surged 92% to $5.8 billion. Total software revenue declined 2% in constant currency to $6.8 billion.
Analysts Split on Market Reaction
Several analysts highlighted the contrast between Oracle’s strong operational performance and the market’s negative response to its profitability outlook.
“While OCI and total Cloud growth came in-line with expectations, the stock fell ~12% AH as management’s FY27 profitability commentary means GMs likely decline more than previously expected,” Stifel analysts said in a post-earnings note.
Analysts at Wolfe Research were more positive on the results, describing the report as “an all-around banger with accelerating revenue, cloud, RPO, and IaaS growth.”
“We think results also helped weaken the SaaS-pocalypse thesis, with ORCL seeing forward indicators growing faster than revenue,” they added.
Guidance Raised for Fiscal 2027
Oracle also issued guidance for the first quarter of fiscal 2027, forecasting adjusted earnings of between $1.72 and $1.76 per share alongside revenue growth of 27% to 29%.
Analysts are currently expecting first-quarter earnings of $1.69 per share.
The company reaffirmed its target of reaching $90 billion in total revenue during fiscal 2027 and increased its adjusted earnings-per-share outlook for the full year to $8.05, reflecting continued confidence in demand for its cloud and AI offerings.