Oracle shares tumble 11% on increased capital raise, cash concerns

Oracle shares tumbled 8% after the software maker told investors to expect an additional $20 billion capital raise, while reporting negative free cash flow for the year.

With Thursday's drop, the stock is now down for the year, falling about 6% and trailing the Nasdaq, which is up about 11%.

For the fiscal fourth quarter, Oracle reported a beat on the top and bottom lines. Revenue jumped 21% to $19.18 billion, topping the $19.1 billion average analyst estimate, according to LSEG. Adjusted earnings per share of $2.03 exceeded the $1.96 average estimate.

But Oracle's artificial intelligence buildout continues to weigh on the stock, as investors question whether the company's massive amount of spending will result in profit growth, after free cash flow in the last fiscal year came in at negative $23.7 billion.

Oracle said it plans to raise $40 billion through debt and equity financing, including a $20 billion share sale announced earlier. That's after raising $43 billion in debt and $5 billion in equity in fiscal 2026.

Capital expenditures jumped 162% to $55.7 billion. New CFO Hilary Maxson said net cash outlay for capex in fiscal 2027 will be around $70 billion, excluding $20 billion to $25 billion in prepayments from customers.

The company maintained its previous revenue guidance of $90 billion for the 2027 fiscal year, while lifting its forecast of adjusted earnings per share to $8.05. Analysts were projecting $8.01 per share and $88.9 billion in revenue.

"We believe ORCL will remain debated, but we are constructive on ORCL's AI-driven consumption growth," wrote analysts at Piper Sandler, in a report late Wednesday. They recommend buying the stock.