Oracle shares tumble 11% on increased capital raise, cash concerns

Oracle shares tumbled 11% and headed for their worst day since January 2025, after the software maker told investors to expect an additional $20 billion capital raise while reporting negative free cash flow for the year.

With Thursday’s drop, the stock is now down for the year, falling about 8% and trailing the Nasdaq, which is up about 9%.

For the fiscal fourth quarter, Oracle reported a beat on the top and bottom lines. Revenue jumped 21% to $19.18 billion, topping the $19.1 billion average analyst estimate, according to LSEG. Adjusted earnings per share of $2.03 exceeded the $1.96 average estimate.

But Oracle’s artificial intelligence buildout continues to weigh on the stock, as investors question whether the company’s massive amount of spending will result in profit growth, after free cash flow in the last fiscal year came in at negative $23.7 billion.

Oracle said it plans to raise $40 billion through debt and equity financing, including a $20 billion share sale announced earlier. That’s after raising $43 billion in debt and $5 billion in equity in fiscal 2026.

Capital expenditures jumped 162% to $55.7 billion. New CFO Hilary Maxson said net cash outlay for capex in fiscal 2027 will be around $70 billion, excluding $20 billion to $25 billion in prepayments from customers.

The company maintained its previous revenue guidance of $90 billion for the 2027 fiscal year, while lifting its forecast of adjusted earnings per share to $8.05. Analysts were projecting $8.01 per share and $88.9 billion in revenue.

“We believe ORCL will remain debated, but we are constructive on ORCL’s AI-driven consumption growth,” wrote analysts at Piper Sandler, in a report late Wednesday. They recommend buying the stock.

Oracle called for $1.72 to $1.76 in adjusted earnings per share for the fiscal first quarter, with 27% to 29% revenue growth. Analysts polled by LSEG had been expecting $1.68 in adjusted earnings per share, along with $19.06 billion in revenue, implying about 28% growth.

Cloud infrastructure revenue jumped 93% to $5.8 billion. The company’s remaining performance obligation, including revenue that hasn’t been recognized, reached $638 billion on May 31, up 363%. Analysts polled by StreetAccount had been looking for $595.67 billion.

Bank of America analysts, who recommend buying Oracle shares, said over 50% of the remaining performance obligation comes from OpenAI. The company’s are partners in the Stargate project, an effort to develop AI infrastructure in the U.S.

Oracle is looking to bring online almost one gigawatt worth of computing power in the current quarter, roughly the total for fiscal 2026, CEO Clay Magouyrk said on a conference call with analysts.

WATCH: Mixed quarter for Oracle