Shares slid 3.9% to $138.09 on July 7, extending a selloff that has erased roughly $147 from Oracle's 52-week highs, as investors continue to digest the staggering cost of the company's AI data-center buildout. No fresh headline triggered today's drop — the quarter increased attention on the cost and timing of data center build-outs and the related funding plan , and a weak Nasdaq (down 1.41%) amplified the pain across large-cap cloud names.
The Numbers That Spooked Wall Street Are Still Sinking In
Oracle spent $55.7 billion on data centers in fiscal 2026, overshooting its own $50 billion guidance.
In Q4 alone, it spent a higher-than-expected $16.5 billion, eating deeply into fast-growing revenues. That left free cash flow at negative $23.7 billion for the year — meaning Oracle burned far more cash building infrastructure than it collected from customers. For shareholders, the implication is straightforward: every dollar of AI growth is, for now, costing more than a dollar to deliver.
Revenue Is Surging, But the Price Tag Keeps Rising Faster
Q4 total revenue hit $19.18 billion, up 21% year-over-year, and cloud infrastructure revenue nearly doubled to $5.79 billion.
Oracle confirmed fiscal 2027 revenue guidance of $90 billion and raised its earnings outlook to $8.05 per share. Impressive — until you learn the company now expects to spend roughly $70 billion in net capital expenditures in fiscal 2027 and plans to raise about $40 billion more through debt and stock sales. That dilutes existing shareholders and balloons an already massive debt load.
The Debt Pile Is Becoming a Story of Its Own
Oracle has approximately $117 billion of debt in the U.S. investment-grade bond index, making it the largest issuer outside the financial sector.
It raised $43 billion in debt and $5 billion in equity in fiscal 2026 alone. If AI demand cools or contracts take longer to convert into revenue, servicing that debt on shrinking cash flow becomes a serious risk.
A Massive Backlog Offers Reassurance — With Caveats
Remaining performance obligations reached $638 billion, up 363% year-over-year.
Most of the increase came from large AI contracts where customers prepaid for chips or supplied them directly, totaling $75 billion. That shifts hardware risk away from Oracle, but the investor concern is not demand — "it is the cost of meeting that demand."
Oracle's growth story is real. The open question is whether it can convert a half-trillion-dollar backlog into profit before the debt catches up.