Despite record AI demand and a soaring $523 billion backlog, Wall Street reacts sharply to Oracle’s aggressive $50 billion spending plans
Oracle (ORCL) suffered a dramatic market sell-off Thursday, with shares sinking as much as 15%—its steepest decline since 2002—after the tech giant’s quarterly results revealed AI-related spending far above Wall Street expectations and revenue that narrowly missed analyst forecasts. Investors recoiled as Oracle disclosed $12 billion in second-quarter capital expenditures, triple last year’s level and markedly above the roughly $8 billion analysts anticipated. The company also raised its full-year capex projection from $35 billion to an unprecedented $50 billion, signaling an aggressive push to expand its AI cloud infrastructure.
While Oracle posted $16.06 billion in revenue—up 14% year over year—it fell short of the $16.21 billion consensus estimate. The miss, combined with eye-popping spending, overshadowed strong performance in the company’s AI-driven cloud segment. Oracle Cloud Infrastructure (OCI) grew 68% to $4.1 billion, and the company reported a stunning 440% surge in remaining performance obligations (RPO) to $523 billion, fueled by long-term commitments from heavyweights like Meta and Nvidia.
Adjusted earnings per share came in at $2.26, crushing expectations of $1.64 and showing meaningful improvement from last year’s $1.47. Oracle also raised its long-term revenue outlook, projecting $89 billion in fiscal 2027, up $4 billion from prior targets.
Still, concerns about an emerging AI bubble have weighed heavily on the stock. Oracle has fallen more than 40% since its September peak, even as the broader “Magnificent Seven” tech group gained 10%. Investors remain uneasy about Oracle’s growing debt load, its dependence on OpenAI to meet ambitious growth goals, and the broader trend of circular financing in the AI ecosystem. Credit default swap data shows the cost of insuring Oracle’s debt has reached its highest level since 2009.
Despite the sell-off, analysts remained optimistic. William Blair’s Sebastien Naji noted that Oracle is poised to benefit from the AI infrastructure boom—if it can execute its strategy while managing mounting financial risks.
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