Oracle Q4 earnings and revenue top estimates; hyperscaler plans more debt issuance
The company posted Q4 FY 2026 earnings Wednesday after the bell.
Oracle reported fiscal fourth-quarter earnings on Wednesday against a backdrop of fresh AI jitters, fueled by conservative Broadcom guidance and macro pressure from hawkish jobs and inflation data. It also said it would issue tens of billions more in debt or equity to fund its AI infrastructure push.
The database software company turned hyperscaler posted revenue and earnings that beat analyst expectations:
Sales of $19.2 billion (estimate: $19.1 billion).
Adjusted earnings per share of $2.11 (estimate: $1.96). It would have been $2.03 without one-time net investment gains.
RPO (remaining performance obligations, or backlog) of $638 billion (estimate: $601.1 billion).
Oracle Cloud Infrastructure revenue of $5.8 billion, versus Wall Street’s $5.7 billion forecast.
Capital expenditure of $55.7 billion, above the $50.9 billion analysts had expected for the year.
Shares of the company fell 5% after-hours. Through Wednesday’s close, the stock was up just over 3% so far this year, slightly trailing the S&P 500.
Oracle has already raised a massive pile of debt to finance its AI aspirations, including $43 billion of debt financing in fiscal 2026. On Wednesday, the company indicated that binge would continue, saying it plans to raise a combined $40 billion via debt and equity in fiscal 2027, including a previously announced $20 billion equity issuance.
Notably, the company said the prepaid and customer-supplied hardware portions of its large AI contracts now total $75 billion, and that “this substantially reduces the amount of capital Oracle must raise to build out our AI datacenters.”
Oracle reiterated its prior revenue guidance for FY 2027 of $90 billion and raised its non-GAAP EPS guidance to $8.05.
On the earnings call, the company said it expects to spend $70 billion in net capex next year, with a total capex of $90-$95 billion after including customer prepayments of $20-$25 billion. Analysts’ had expected much less: $61.5 billion.
Beyond the top- and bottom-line beats, Wall Street’s focus remains squarely on Oracle’s massive remaining performance obligations (RPO), contracted future revenue that’s largely anchored by its partnership with OpenAI for the $500 billion “Stargate” supercomputer initiative. But anchoring so much of its future revenue to a single, cash-burning AI startup is a terrifying prospect for some investors, creating massive concentration risk if the broader AI boom cools.
To help de-risk this massive AI build-out, Oracle has demanded long-term capacity commitments and leaned into multi-cloud partnerships with rivals like Microsoft and Google. Still, concerns linger over whether Oracle can actually scale its capacity fast enough to meet the intense demand without buckling.
Skyrocketing capex has dragged on Oracle’s free cash flow to a deeply negative $23.7 billion for the year. While management stresses that customer prepayments and partner-funded models cover most of this new hardware, the cash drain keeps Wall Street anxious about Oracle’s mounting debt load. Ultimately, continued RPO growth is the key metric that will demonstrate whether Oracle’s strategy of locking in forward demand to fund its aggressive build-out is paying off.
Earlier today, Oracle won a contract with the Trump administration to provide HR software across US agencies — news that didn’t move the stock.
