New York, June 11, 2026, 06:46 (EDT)
- Oracle shares dropped over 9% before the bell as traders zeroed in on spending for its AI data centers instead of the company’s record cloud gains.
- Oracle said remaining performance obligations climbed to $638 billion. But the company’s fiscal 2026 capex surged more than 100% to $55.66 billion.
- Wall Street wants AI names, beyond the semiconductor space, to show that AI demand can produce free cash flow, and not just backlog.
Oracle’s shares tumbled more than 9% to $182.95 ahead of Thursday’s session after the company posted record Q4 numbers, then flagged a sharp rise in spending to build out its AI infrastructure. Investors reacted to the bigger capital bill, even as AI demand stayed hot.
Oracle posted a 21% gain in quarterly revenue, up to $19.2 billion. Total cloud revenue came in 47% higher at $9.9 billion. Oracle Cloud Infrastructure, the company’s IaaS arm, jumped 93% to $5.8 billion, while its cloud applications segment reported a 10% increase, hitting $4.1 billion.
Capex was in focus as shares came under pressure. Oracle spent $55.66 billion on capital expenditures in fiscal 2026, up from $21.22 billion last year. Free cash flow, which is operating cash after capex, dropped to negative $23.7 billion even though operating cash flow hit a record $32.0 billion.
That’s the shift from what investors expected before the report. In March, Oracle put its fiscal 2026 revenue forecast at $67 billion and capital spending at $50 billion. Wednesday, Oracle posted $67.4 billion in revenue, but capex was about $5.7 billion higher than its earlier goal. The company also now plans to raise around $40 billion via debt and equity in fiscal 2027.
Backlog numbers drive the bull case here. Oracle reported that remaining performance obligations, or RPO, climbed $85 billion from the previous quarter, now at $638 billion. That’s a 363% jump from a year earlier. Oracle added that prepaid and customer-supplied hardware from big AI deals hit $75 billion. The company said that cuts down the capital it needs to fund new AI data centers.
Oracle’s capital spending plans were in focus after Reuters said CFO Hilary Maxson told analysts the company is looking for $70 billion in capital spending of its own for fiscal 2027, with another $20 billion to $25 billion it thinks will be reimbursed. That could put total reported capex as high as $95 billion. LSEG numbers cited by Reuters show analysts were looking for $67.66 billion.
Oracle is under pressure to show it can move quickly enough for the spending it has committed. CEO Clay Magouyrk told analysts, “Our pace of delivery continues to accelerate.” The company is closing in on one gigawatt of fiscal first-quarter delivery, using that unit as a benchmark for AI data center scale. Reuters
OpenAI and other big AI clients are behind the push. Oracle is working on a giant Stargate data center in Texas with OpenAI and others, Reuters said, and the location is set to pass the 75% mark in the next 90 days. OpenAI said its advanced coding models are now available for customers on Oracle’s cloud.
Oracle is turning into a key AI story outside the chip space. It’s not seen just as a software shop with juicy support margins anymore. The market is looking at it more like a capex-heavy cloud player that wants to go after Amazon and Microsoft. But the shift comes as Oracle’s software revenue dropped 2% to $6.8 billion as customers left on-premise for the cloud.
Jacob Bourne, analyst at eMarketer, summed up the split in the market’s view. “The demand is real,” he told Reuters. But, “the funding question is getting harder,” with capital spending above what the Street expected and free cash flow still in the red. Reuters
The risk isn’t just that AI demand might slow. Even if Oracle’s right about demand, it could let down shareholders if data-center builds slip, gross margins drop more than expected, debt costs go up, new equity hits existing holders, or customer payments are slower than forecast. Oracle’s own safe-harbor notes risks with getting tech parts, running and scaling data centers, cybersecurity, legal and regulatory issues, and market swings.
Oracle’s next test is coming up fast. The company guided for fiscal Q1 revenue growth between 27% and 29%, with cloud revenue seen jumping 58% to 64% in U.S. dollars. Maxson told analysts Oracle expects to recognize 12% of its $638 billion RPO—about $76.56 billion—over the next year. Investors want to see that backlog start to hit revenue and cash flow before the AI story takes over again.
