Oracle’s share price has dropped sharply follows reports that the company’s spending on data centres has exceeded earlier forecasts, raising concerns among shareholders about the eventual profitability of its AI initiatives, Bloomberg reports.
Financial data for the period ending 31 May showed that capital expenditure amounted to $16.5 billion dollars (€14.3 billion), bringing the annual total to $55.7 billion (€48.3 billion), exceeding the company’s target of $50 billion (€43.4 billion).
CFO Hilary Maxson indicated that net capital expenditure for the financial year ending in May 2027 is expected to be around $70 billion (around €60.7 billion). She noted that this figure includes an additional $20-25 billion (around €17.3-21.7 billion) that has been reserved for advance payments on hardware components.
Aggressive financing strategies
To finance its transformation into an AI infrastructure provider for customers such as OpenAI, Oracle has raised capital aggressively. In the most recent financial year, the company raised $5 billion (around €4.3 billion) in equity and $43 billion (around €37.3 billion) through debt.
The plans for the 2027 financial year include raising a further $40 billion (€34.4 billion) through debt and equity, including a planned share sale programme worth $20 billion (€17.4 billion ).
Despite concerns about spending, the company’s growth figures remain strong. Quarterly revenue rose by 21% to €19.2 billion (around €16.6 billion), with adjusted earnings of $211 per share, beating analysts’ expectations of $197.
Cloud infrastructure revenue in particular rose by 93% to $5.8 billion (around €5 billion), which was slightly better than forecasts. In addition, total cloud revenue is expected to grow by 61% in the quarter ending in August.
Oracle also reported a substantial increase in remaining performance obligations, totalling $638 billion (around €553.3 billion). This increase is largely attributable to large AI contracts in which customers pay upfront for server hardware, a move that the company says reduces the amount of external capital it needs to raise.
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