Oracle reported better-than-expected fourth quarter results on Wednesday, posting $2.03 adjusted earnings per share against $1.96 expected and $19.18 billion in revenue against $19.10 billion expected. The stock dropped 7% in extended trading after the company disclosed plans to raise $40 billion in new debt and equity financing to fund its AI infrastructure buildout.
The Numbers
Revenue grew 21% year over year in the quarter ending May 31. Net income rose to $4.22 billion ($1.45 per share), up from $3.43 billion ($1.19 per share) a year ago. Cloud infrastructure revenue jumped 93% to $5.8 billion, while total cloud revenue climbed 47% to $9.91 billion.
The company maintained its $90 billion revenue guidance for fiscal 2027 and raised its adjusted EPS forecast to $8.05, above the $8.01 analyst consensus.
Oracle’s remaining performance obligations reached $638 billion, up 363% year over year. According to CNBC, Bank of America analysts estimate that over 50% of that backlog comes from OpenAI.
The Capital Question
The $40 billion capital raise comes on top of $43 billion in debt and $5 billion in equity Oracle already raised during fiscal 2026. Net capital expenditures for fiscal 2027 will be approximately $70 billion, excluding $20 to $25 billion in customer prepayments, according to new CFO Hilary Maxson on the earnings call.
For context: Oracle spent $55.66 billion in capex during fiscal 2026, up 162% year over year. The company reported $23.7 billion in negative free cash flow for the year, with depreciation nearly doubling to $7.62 billion.
CEO Clay Magouyrk told analysts Oracle expects to bring roughly one gigawatt of computing capacity online in the current quarter, approximately equal to the total brought online in all of fiscal 2026, according to CNBC.
Where the Money Goes
The infrastructure buildout is concentrated in purpose-built AI data centers. Related Digital and Blackstone have secured financing for a $16 billion Oracle data center project in Saline Township, Michigan. Oracle’s press release noted that customer GPU prepayments and customer-supplied GPUs reduce the total Oracle needs to finance directly.
The Infrastructure Cost Curve
Oracle is now the clearest public proxy for what it costs to run AI at scale. AWS generated $37.59 billion in cloud revenue in its March quarter. Oracle’s cloud infrastructure revenue, at $5.8 billion, is a fraction of that, but growing at 93%. The question investors answered after hours, with a 7% selloff, is whether that growth rate justifies $70 billion in annual capital spending and $40 billion in new financing on top of it.
The backlog concentration matters: with over half of RPO tied to a single customer (OpenAI), Oracle’s AI infrastructure bet is also a bet on one company’s trajectory. If OpenAI’s own IPO filing leads to a revaluation of its compute needs, Oracle’s $638 billion pipeline reprices accordingly.