Oracle stock slumped after it reported disappointing revenues on Wednesday alongside a $15 billion (€12.8 billion) increase in its planned spending on data centres this year to serve artificial intelligence groups.
Shares in Larry Ellison’s database company fell 14 per cent on Thursday. The move came as Oracle reported revenues of $16.1 billion in the last quarter, up 14 per cent from the previous year but below analysts’ estimates.
Oracle raised its forecast for capital expenditure this financial year by more than 40 per cent to $50 billion. The outlay, largely directed to building data centres, climbed to $12 billion in the quarter, above expectations of $8.4 billion.
Its long-term debt including operating leases increased to $116.3 billion, up 44 per cent from a year ago.
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Oracle has launched an aggressive drive to catch up with much larger cloud players such as Google, Amazon and Microsoft in the race to supply the vast amount of computing power that AI groups including OpenAI and Anthropic need to train and run their models.
[ Oracle’s share price surge suggests the AI trade still has momentumOpens in new window ]
Clay Magouyrk, Oracle’s co-chief executive, said its cloud contracts would “quickly add revenue and margin to our infrastructure business” as he defended the vast investments.
Yet the company said it expected full-year revenues to remain unchanged from its previous forecast of $67 billion. It expected to generate $4 billion more in revenue the following fiscal year.
Total bookings for future revenue, known as remaining performance obligations, rose 15 per cent to $523 billion in the three months to the end of November, supported by deals with Meta and Nvidia.
Investors initially welcomed the push into AI from Oracle. Shares surged after its last earnings in September when it disclosed it had added more than $300 billion in bookings, largely driven by data centre contracts with OpenAI.
But the stock has given up its gains since then as investors worry about the large amounts Oracle will have to borrow and spend on infrastructure for the ChatGPT maker — and concerns over the start-up’s ability to pay for these contracts in the years ahead.
Debt investors have also soured on the company.
Oracle’s Big Tech rivals such as Amazon, Microsoft and Google have helped reassure investors about their large capital investments by posting strong earnings from their vast cloud units.
But in the last quarter, Oracle’s cloud infrastructure business, which includes its data centres, posted worse than expected revenues of $4.1 billion. Ellison’s company is also relying more heavily on debt to fuel its expansion. - Copyright The Financial Times Limited 2025
