New York, June 12, 2026, 06:45 ET
- Oracle shares dropped even as the company posted record quarterly results, with investors focused on AI data-center spending and new financing plans.
- Oracle bulls are looking at 93% growth in Oracle Cloud Infrastructure and a record $638 billion backlog.
- The big question for Oracle now is if its big AI capex push turns into higher revenue, margins, and cash flow.
Oracle Corporation shares struggled as investors shrugged off record fiscal Q4 revenue and turned to the cost of the company’s AI infrastructure spending. Oracle last changed hands near $184.10, giving it a roughly $536.1 billion market cap and a trailing price-to-earnings ratio of about 33. That price-to-earnings ratio is a standard valuation check. The stock dropped 12% Thursday, according to Reuters, with investors worried about higher capital spending and debt levels as Oracle ramps up its AI cloud infrastructure investments.
Oracle shares sold off despite the company posting record results. Fiscal Q4 revenue came in at $19.2 billion, a gain of 21%. Total cloud revenue rose 47% to $9.9 billion and Oracle Cloud Infrastructure (OCI) revenue surged 93% to $5.8 billion. OCI is Oracle’s cloud platform for data, applications, and AI. Non-GAAP EPS reached $2.11, up 24%. Full-year revenue hit $67.4 billion, up 17%.
Investors are now focusing more on the quality of Oracle’s growth, not just the growth numbers. Oracle’s remaining performance obligations, or RPO, climbed $85 billion quarter over quarter to $638 billion, showing a potential pipeline if the company hits its margin targets. CFO Hilary Barbara Maxson told analysts RPO “finished at $638 billion, up 363%,” and said that gives Oracle “exceptional visibility” into future revenue. The Motley Fool
Capital spending is the weak spot for Oracle. Free cash flow, or cash left after capex, came in at negative $23.7 billion in fiscal 2026 as the company pushed investments into cloud infrastructure. Oracle said it raised $43 billion in debt and $5 billion in equity that year, and flagged plans to tap about $40 billion more in debt and equity for fiscal 2027. That includes a previously announced $20 billion at-the-market equity raise. Oracle Investor Relations Reuters reported Oracle expects about $70 billion in net capex this year, with analysts asking about how the company will fund it, what returns could look like, and if rivals might take any advantage if Oracle cuts back on spend.
Oracle could be shifting from enterprise software to a key AI infrastructure player. The company said recent RPO growth was driven by big AI deals, as customers either prepaid for GPUs — the chips used in AI training — or brought their own GPUs. That eased Oracle’s funding needs on these contracts. Oracle Investor Relations CEO Clayton Magouyrk told analysts, “AI infrastructure makes the existing cloud infrastructure market look small.” He said Oracle signed $67 billion in AI infrastructure contracts in the quarter, mostly structured as prepaid or bring-your-own-hardware. The Motley Fool
Analysts are split on Oracle, with some warning about near-term cash-flow risk and others pointing to possible AI gains later on. Barron’s said Guggenheim’s John DiFucci has a Buy and a $400 target, D.A. Davidson’s Gil Luria bumped his target to $225, and William Blair’s Sebastien Naji stayed Outperform after the selloff. Reuters, meanwhile, pointed to worries from Citizens JMP and Melius Research over margins, capex, and outside pressure. Barron’s The split is more important now, as Oracle’s valuation is less about AI demand and more about whether it can keep building without hurting margins or diluting shareholders for good.
Oracle’s next big test comes with its fiscal Q1 2027 update set for September 10. Investors want to see signs the $638 billion backlog is flowing into revenue and that capex is paying off. The company also flagged an Oracle Investor Day for October 28 in Las Vegas, part of Oracle AI World, where questions about AI capacity, funding, and longer-term goals are likely.
Oracle stock doesn’t look like a clear bargain after the selloff, based on what’s known today. OCI growth is moving faster, RPO is big, and customer prepayments might help ease funding needs. But the stock still faces big risks: free cash flow is negative, more debt and shares are coming, and gross margins are under pressure. There’s also a heavy reliance on a few major AI customers, which means execution has to be tight. This is less a typical software investment now and more a leveraged play on executing in AI infrastructure.
