Oracle shares tumble 8% on increased capital raise, cash concerns

Seer Shares fell 8% after the software maker told investors to expect an additional $20 billion in capital raising and reported negative free cash flow for the year.

With Thursday’s decline, the stock is now down for the year, down about 6% and trailing the Nasdaq, which is up about 11%.

In its fiscal fourth quarter, Oracle reported improvement on both its top and bottom lines. Revenue rose 21% to $19.18 billion, beating the average analyst estimate of $19.1 billion, according to LSEG. Adjusted earnings per share were $2.03, beating the average estimate of $1.96.

But after free cash flow hit negative $23.7 billion last fiscal year, Oracle’s AI development continues to weigh on the stock as investors question whether the company’s massive spending will result in profit growth.

Oracle said it plans to raise $40 billion through debt and equity financing, including a previously announced $20 billion share sale. This follows an increase of $43 billion in debt and $5 billion in equity in fiscal 2026.

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

The company maintained its previous revenue forecast of $90 billion for fiscal 2027, while increasing its adjusted earnings per share forecast to $8.05. Analysts were forecasting $8.01 per share and revenue of $88.9 billion.

“We believe ORCL will continue to be discussed, but we are constructive on ORCL’s AI-driven consumption growth,” analysts at Piper Sandler wrote in a report late Wednesday. They recommend buying stocks.

Oracle called adjusted earnings per share for the fiscal first quarter of $1.72 to $1.76, with revenue growth of 27% to 29%. Analysts surveyed by LSEG expected adjusted earnings per share of $1.68 and revenue of $19.06 billion; This means approximately 28% growth.

Cloud infrastructure revenue increased 93% to $5.8 billion. The company’s remaining performance liability, which includes unrecognized revenue, rose 363% to $638 billion on May 31. Analysts surveyed by StreetAccount were looking for $595.67 billion.

Bank of America analysts who recommended buying Oracle shares said more than 50% of the remaining performance liability comes from OpenAI. The company’s partners are partners in the Stargate project, an effort to develop artificial intelligence infrastructure in the United States.

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

WRISTWATCH: Mixed quarter for Oracle