Oracle (ORCL) reported robust fiscal fourth-quarter results on June 10, 2026, surpassing analyst expectations with adjusted earnings per share of $2.11 versus the anticipated $1.96, and revenue of $19.18 billion compared to the expected $19.10 billion. This marked a 21% year-over-year revenue increase, with net income rising to $4.22 billion, or $1.45 per share, from $3.43 billion, or $1.19 per share, a year earlier. Adjusted earnings exclude stock-based compensation impacts [1].
Despite the strong financial performance and an improved profit forecast for the year—Oracle lifted its adjusted earnings per share guidance to $8.05 for fiscal 2027, above analyst projections of $8.01, while maintaining revenue guidance at $90 billion—Oracle's stock dropped 7% in extended trading. The decline was attributed to investor concerns over Oracle's plans to raise an additional $20 billion, part of a broader $40 billion capital raise through debt and equity financing to fund its AI buildout. This follows $43 billion in debt and $5 billion in equity raised in fiscal 2026, which contributed to $23.7 billion in negative free cash flow and a 162% increase in capital expenditures to $55.66 billion. Depreciation nearly doubled to $7.62 billion [1].
Oracle's guidance for the fiscal first quarter calls for adjusted earnings per share between $1.72 and $1.76, with revenue growth projected at 27% to 29%. Analysts had expected $1.68 in adjusted earnings per share and $19.06 billion in revenue, implying about 28% growth. Cloud offerings revenue surged 47% to $9.91 billion, though slightly below analyst expectations of $9.97 billion. Software revenue, including licenses and support, totaled $6.82 billion, down 2% but above consensus estimates. Cloud infrastructure revenue soared 93% to $5.8 billion, while Oracle's remaining performance obligation (RPO) reached $638 billion, up 363% and well above analyst expectations of $595.67 billion. The company attributed most of the RPO increase to large-scale AI contracts, where customers prepaid Oracle for GPU purchases or supplied GPUs directly, reducing Oracle's need for data center construction capital [1].
Bank of America analysts recommend buying Oracle shares, noting that over 50% of the remaining performance obligation is tied to AI contracts. However, investor concerns persist regarding whether demand for artificial intelligence will justify the significant new capital being raised [1].
CONCLUSION
Oracle delivered strong Q4 results and raised its profit outlook, but investor concerns over aggressive capital raising for AI expansion led to a sharp stock decline. While analysts remain bullish on Oracle's AI-driven growth, the market is cautious about the company's negative free cash flow and high capital expenditures. The outcome underscores a tension between Oracle's ambitious AI investment strategy and investor risk appetite.