The shares of US-based IT major Oracle tumbled 10% in after-market hours on Wall Street after a massive AI spending forecast triggered worries over ballooning debt, despite the company reporting better-than-expected quarterly earnings.
Oracle on Wednesday reported total revenue of $19.18 billion for the fourth quarter, higher than analysts' estimate of $19.10 billion, according to data compiled by LSEG, as quoted by Reuters. Its adjusted profit of $2.11 per share for the quarter under review also exceeded expectations of $1.96 per share.
Along with the Q4 results, Oracle said it expects to raise nearly $40 billion through a combination of debt and equity financing in 2027. This includes its previously announced $20 billion at-the-market equity issuance.
"Oracle’s capital investment programme supports the pursuit of unprecedented opportunities in AI Cloud Infrastructure," the company said. It raised $43 billion in debt financing and $5 billion in equity financing in fiscal year 2026. It added that it does not expect to issue additional debt in calendar year 2026.
Oracle on Wednesday said that it is building a massive "Stargate" data centre in Texas with OpenAI and others, which will be more than three-quarters complete within 90 days. OpenAI, meanwhile, said its customers can start accessing OpenAI's cutting-edge coding models on Oracle's cloud.
"Our pace of delivery continues to accelerate, with our (fiscal first quarter of 2027) delivery approaching one gigawatt, nearly the same capacity as we've delivered in the previous four quarters combined," Oracle CEO Clay Magouyrk told analysts on a conference call.
Also read: Global AI debt issuance to top $500 billion in 2026: Morgan Stanley
Oracle had said in February it aimed to raise as much as $50 billion this year through a combination of debt and equity sales. The rising debt levels to fund new AI projects by Oracle and other tech giants have led to several analysts sounding the alarm over a possible AI bubble that can pop anytime.
Morgan Stanley, in a recent report, forecast AI-related global debt issuance to more than double to nearly $570 billion in 2026, highlighting a rising bond supply and credit market activity as hyperscalers turn to alternative funding sources to meet massive AI-driven capex needs. Hyperscalers Alphabet, Amazon, Microsoft and Meta are expected to spend $700 billion in outlays this year.
Also read: Oracle's AI spending blows past estimates, raising worries over growing debt
Oracle shares dropped 10% to fall below $181 per share in after-hours trading on Wall Street. Along with the Q4 results, Oracle also announced a dividend of $0.5 per share, with July 10 as the record date to determine the eligibility of shareholders for the payment.
“For fiscal year 2027, we confirm our prior revenue guidance of $90 billion total revenue and raise our non-GAAP EPS guidance to $8.05, which is growth of 18% after adjusting for the one-time events of selling our Ampere chip business and Bloom Energy warrants in fiscal year 2026,” it said.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
