Oracle Stock Plunges as $95 Billion AI Spending Plan Spooks Investors

Oracle shares fell sharply on Thursday, after the company announced that its capital expenditures are expected to reach as much as $95 billion in fiscal 2027.

This was significantly above the analyst expectations of $67.7 billion, sending Oracle’s stock down even as the software giant reported record profits in the latest earnings call.

Oracle now expects its customers to repay somewhere around $20-25 billion of those expenditures, leaving the company with $70 billion in its own capital spending.

What’s more, Oracle stated that it plans to raise $40 billion through debt and equity financing during the next fiscal year, and investors were simply not impressed with the scale of this commitment, as the company’s shares dropped by more than 10% in premarket trading.

Oracle continues its push to build new data centers and expand its computing capacity in order to compete with other tech giants like Amazon and Microsoft in the cloud infrastructure market, with its massive Stargate data center expected to be finished by the end of the year.

The company’s underlying business has shown strong growth, with fourth-quarter revenue reaching $19.18 billion, while cloud services revenue jumped by 46%. The cloud infrastructure revenue also surged by 92% to $5.8 billion, while its remaining performance obligations climbed to $638 billion.

However, those massive contracts that Oracle secured with OpenAI and Meta require the company to spend tens of billions of dollars before the demand can be translated into revenue, and investors find the immediate costs of supporting that backlog difficult to ignore.

Oracle has proven that it can compete in AI infrastructure, but the question of how much debt, dilution and negative cash flow it will require to get to where it wants to be in the next few years is increasingly scaring its investors.