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Oracle’s AI spending crossed all estimates, raising concerns over growing debt.
Oracle reported its Q4 FY2026 earnings on June 10, and the numbers looked great on the surface. The stock still fell nearly 9% in trading.
That tells you everything about where investor attention actually was.
The Q4 revenue came in at $19.2 billion, up 21% year over year, beating a Wall Street estimate of $19.10 billion. Adjusted earnings came in at $2.03 per share, ahead of the $1.96 analysts had penciled in.
Everything looks smooth and good, still, stock prices shatter. The reason is AI spending.
Oracle’s capital expenditure for fiscal 2026 reached $55.66 billion, exceeding its own $50 billion target. That overshoot is not a rounding error. It means Oracle spent more than it told investors it would, and it still has not finished building.
Free cash flow came in at negative $23.7 billion for fiscal year 2026. Simply put, Oracle is burning through cash faster than it is earning it, and analysts do not expect that to change until around 2030.
Oracle is funding most of this with debt.
The company raised $43 billion in debt financing and $5 billion in equity during the fiscal year just ended. It plans to raise another $40 billion in equity and debt in fiscal 2027. The company carries approximately $117 billion of debt in the Bloomberg US high-grade corporate bond index, making it the largest issuer outside the financial sector.
That is a staggering position for a software company that, not long ago, was mostly known for selling databases.
Oracle’s big bet is tied directly to OpenAI. Under a five-year arrangement starting in 2027, OpenAI pays Oracle roughly $60 billion annually for cloud computing, giving the company a committed revenue stream to build toward.
The physical center of this bet is the Stargate data center in Abilene, Texas. Oracle said the Stargate data center, which it is building with OpenAI and others, will be more than three-quarters complete within 90 days, and OpenAI confirmed that customers can start accessing its cutting-edge coding models on Oracle’s cloud.
Remaining Performance Obligations, or RPO, closed the quarter at $638 billion, up 363% year over year. RPO is contracted future revenue that Oracle has locked in but not yet earned.
For the first time, CFO Hilary Maxson gave a concrete schedule for when it arrives. The company expects 12% of its RPO, around $76.56 billion, over the next 12 months, and another 34%, roughly $216.92 billion, in the two years after that. The backlog is real. But it does not pay bills today, and Oracle is spending aggressively right now.
On the earnings call, Oracle said it expects to spend $70 billion in net capex next year, with a total capex of $90 to $95 billion after including customer prepayments of $20 to $25 billion. Analysts had expected $67.66 billion in total capital spending. Oracle guided nearly $30 billion above that.
Near-term guidance came in flat, signaling to investors that a $300 billion contract does not translate into immediate quarterly results. Data center construction takes time, and investors are questioning whether Oracle can execute at the promised scale before rivals capture those workloads.
Oracle cut more than 30,000 jobs in the past quarter, shifting that payroll cost toward AI infrastructure investment. It was not enough to reassure the market. The stock dropped 8.9% in after-hours trading on June 10.
Oracle is making an enormous bet that AI infrastructure spending will eventually generate returns big enough to justify the debt. The demand is clearly there. But as Jacob Bourne, analyst at eMarketer, put it: “The demand is real with cloud infrastructure revenue and backlog growing fast. But the funding question is getting harder, not easier, with capex coming in well above estimates and free cash flow still negative.”
Oracle is not unique here. The entire AI industry is running the same playbook at different scales. But Oracle is among the most exposed, and right now the market is making that very clear.
