Oracle (ORCL) Stock Drops 10% After Earnings as $40 Billion Fundraise Spooks Investors

TLDR

• Oracle beat Q4 earnings and revenue estimates, with EPS of $2.03 adjusted vs. $1.96 expected and revenue of $19.18 billion vs. $19.10 billion expected
• The stock dropped around 10% in extended trading after Oracle announced plans to raise another $40 billion through debt and equity in fiscal 2027
• Cloud infrastructure revenue jumped 93% year over year to $5.8 billion, while software revenue disappointed, falling 2%
• Oracle’s remaining performance obligation (RPO) hit $638 billion — up 363% — with more than half tied to a single multiyear contract with OpenAI
• Capital expenditures for fiscal 2027 are expected to hit around $70 billion, with free cash flow coming in at negative $23.7 billion for fiscal 2026

Oracle beat Wall Street’s estimates on both earnings and revenue for its fiscal fourth quarter, but that wasn’t enough to keep the stock from falling. ORCL dropped around 10% in after-hours trading after the company said it plans to raise another $40 billion to fund its AI buildout.

Oracle Corporation, ORCL

The stock closed Wednesday up just 3% year to date, compared to a 6% gain for the S&P 500.

For the quarter ended May 31, Oracle posted adjusted EPS of $2.03, beating the $1.96 consensus. Revenue came in at $19.18 billion, just above the $19.10 billion expected, and up 21% year over year.

Net income rose to $4.22 billion, or $1.45 per share, from $3.43 billion a year ago.

Cloud Is the Star, Software Is the Problem

Oracle Cloud Infrastructure revenue surged 93% to $5.8 billion, keeping the momentum that’s been building for several quarters.

But software — once Oracle’s bread and butter — is slowing down. Legacy software sales fell 2%, and cloud software also came in below expectations. Combined software revenue grew just 2% to $11 billion.

The company maintained its fiscal 2027 revenue target of $90 billion. It raised its adjusted EPS forecast to $8.05, above the $8.01 analyst consensus. Q1 guidance called for 27% to 29% revenue growth and adjusted EPS of $1.72 to $1.76, both slightly ahead of estimates.

The Capital Machine Keeps Running

Oracle said it raised $43 billion in debt and $5 billion in equity during fiscal 2026. Now it’s planning another $40 billion in fiscal 2027 — $20 billion of which is a share sale announced earlier.

Capital expenditures jumped 162% to $55.7 billion in fiscal 2026, and the company expects that to hit around $70 billion in fiscal 2027 — excluding $20 billion to $25 billion in direct prepayments from customers.

Free cash flow came in at negative $23.7 billion for the year, with depreciation nearly doubling to $7.62 billion.

The RPO — a measure of contracted future revenue — climbed 363% to $638 billion. Bank of America analysts noted that more than 50% of that figure comes from OpenAI alone.

Oracle also said it plans to bring nearly one gigawatt of computing power online in the current quarter — roughly equivalent to everything it deployed in all of fiscal 2026.

During the quarter, Oracle hired Hilary Maxson, formerly of Schneider Electric, as its new CFO. Related Digital and Blackstone separately announced $16 billion in funding for a new Oracle data center site in Michigan.

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