Oracle shares plunged more than 12% in pre‑market trading on Thursday, extending the decline that began after the company posted quarterly results that fell short of expectations.
The cloud‑computing and database‑software giant reported revenue of $16.06 billion for the quarter, compared with the $16.21 billion analysts had forecast, according to LSEG data. The miss came despite robust demand for Oracle’s artificial‑intelligence infrastructure offerings.
The slip in Oracle’s stock reverberated across the AI‑related sector. Nvidia slipped 1.4%, Micron fell 1%, Microsoft dipped 0.4%, cloud‑specialist Coreweave slid 3.9%, and AMD was down 1.3% in early trading.
Oracle has been in the spotlight since it raised $18 billion in a September bond offering, one of the largest debt issuances in the technology sector in recent years. That financing helped the company seal a $300‑billion partnership with OpenAI earlier this month, positioning Oracle as a contender for large‑scale AI contracts alongside Amazon, Microsoft and Google.
While the partnership underscores Oracle’s ambition to become a major AI‑infrastructure provider, investors remain wary of the company’s debt load and the pace of its capital deployment. The firm is borrowing heavily to fund data‑center construction, a strategy echoing recent bond sales by other tech firms that are racing to capture AI spending.
Oracle has secured multibillion‑dollar construction loans from a consortium of banks to fund new data centers in New Mexico and Wisconsin. Citi estimates the company will raise roughly $20 billion to $30 billion of debt each year for the next three years to support its expansion.
Chief Financial Officer Doug Kehring told analysts that Oracle intends to maintain its investment‑grade credit rating. He highlighted alternative financing options, such as customers installing their own chips in Oracle’s data centers or leasing chips from suppliers, which could align cash outflows with incoming revenue and reduce the need for additional borrowing.
Oracle now projects full‑year capital expenditures of about $50 billion, up from $35 billion in September, while fiscal 2025 capex stood at $21.2 billion. The higher spending outlook reflects the company’s aggressive push to scale AI‑ready infrastructure.
For the November quarter, Oracle reported free cash flow of negative $10 billion, well below the StreetAccount consensus estimate of a $5.2 billion shortfall. Free cash flow is a key metric for investors assessing a firm’s ability to service its debt in an environment where AI‑related spending is accelerating.
Despite the recent earnings miss, Oracle’s stock is up roughly 34% year‑to‑date, suggesting that investors are still betting on the long‑term payoff of its AI and cloud strategy.
Analysts caution that the company’s success will hinge on its ability to monetize AI infrastructure at margins that justify the sizeable debt burden. Competitive pressure from entrenched cloud providers could compress pricing, while rapid technology cycles may force additional capital investments sooner than anticipated. Monitoring Oracle’s cash conversion, debt ratios, and customer adoption rates will be critical in evaluating whether the AI bet delivers sustainable shareholder value.
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