Oracle shares slide as capital raise plan deepens cash flow concerns

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Oracle shares slide on capital raise

Highlights

Oracle plans an additional $20 billion capital raise, bringing its total planned financing to $40 billion amid accelerated AI infrastructure spending and negative $23.7 billion free cash flow.
Fiscal Q4 revenue rose 21% to $19.18 billion and adjusted EPS reached $2.03, both exceeding analyst expectations, but shares slid due to capital outlay concerns.
Oracle raised fiscal 2027 revenue and EPS forecasts to $90 billion and $8.05, with cloud infrastructure revenue up 93% and remaining performance obligation surging 363% to $638 billion.

Funding needs grow alongside AI expansion

As reported by CNBC, Oracle tells investors it expects an additional $20 billion capital raise while continuing a rapid buildout of artificial intelligence infrastructure. The company says it plans to raise $40 billion through debt and equity financing, including a $20 billion share sale announced earlier, after already raising $43 billion in debt and $5 billion in equity in fiscal 2026.

The pressure on the shares comes despite stronger-than-expected fiscal fourth-quarter results. Revenue rises 21% to $19.18 billion, above the $19.1 billion analyst estimate compiled by LSEG, while adjusted earnings per share of $2.03 top the $1.96 consensus estimate.

Investors remain focused on Oracle’s cash generation as spending accelerates. Free cash flow for the last fiscal year stands at negative $23.7 billion, capital expenditures jump 162% to $55.7 billion, and new CFO Hilary Maxson says net cash outlay for capital expenditure in fiscal 2027 will be about $70 billion, excluding $20 billion to $25 billion in customer prepayments.

Cloud backlog supports growth outlook

Oracle keeps its revenue target of $90 billion for fiscal 2027 and raises its adjusted earnings per share forecast to $8.05, ahead of analyst expectations for $8.01 per share and $88.9 billion in revenue. For the fiscal first quarter, the company calls for adjusted earnings per share of $1.72 to $1.76 and revenue growth of 27% to 29%, compared with LSEG expectations of $1.68 per share and $19.06 billion in revenue.

Cloud infrastructure remains the main growth engine, with revenue up 93% to $5.8 billion. Oracle’s remaining performance obligation reaches $638 billion as of May 31, up 363% and above the $595.67 billion expected by analysts polled by StreetAccount.

Bank of America analysts say more than half of that remaining performance obligation comes from OpenAI, Oracle’s partner in the Stargate project to develop AI infrastructure in the U.S. CEO Clay Magouyrk says on a conference call that Oracle is looking to bring online almost one gigawatt of computing power in the current quarter, roughly equal to the total added in fiscal 2026.

In our earlier coverage of Oracle’s ORCL price weakness after its Q4 results, we noted that record revenue growth and a swelling cloud backlog were overshadowed by negative free cash flow and plans for heavier data center spending. That article also highlighted deteriorating technical signals, with the stock trading below key moving averages and traders closely watching downside support levels as funding and capex concerns weighed on sentiment.

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