Strong earnings not enough: Oracle tumbles over 9% after-hours on $40B fundraising plan

Oracle beat market expectations with its latest earnings, but concerns over a massive capital-raising plan sent the stock down more than 9% in after-hours trading.

Oracle said Wednesday that sales for the fourth quarter of fiscal year 2026 (March–May) reached $19.18 billion, up 21% from a year earlier, topping the consensus estimate of $19.1 billion.

Adjusted earnings per share came in at $2.11, also above the consensus of $1.90. Remaining performance obligations — a measure of contracted future revenue — stood at $638 billion, roughly 9.5 times the company's annual sales.

Oracle maintained its fiscal year 2027 sales outlook at $90 billion and raised its adjusted EPS guidance to $8.05.

Markets, however, focused less on the earnings beat and more on the scale of the company's investment ambitions.

Oracle said it plans to raise a total of $40 billion through a combination of bond and equity issuances, including a previously announced $20 billion share offering. The fundraising announcement weighed on the stock, driving shares down more than 9% in after-hours trading.

"It has become clear that far more capital than expected is needed to secure AI competitiveness," said Seo Sang-young, a researcher at Mirae Asset Securities. "Investors are focused on the potential deterioration of future cash flows and dilution of shareholder value, which is pushing the share price lower."

Oracle set its net cash capital expenditure for fiscal year 2027 at approximately $70 billion.

"The question of how far it is reasonable for companies to keep expanding capital expenditure — and to keep raising funds to cover it — has resurfaced," said Kim Seok-hwan, also a researcher at Mirae Asset Securities.

Investors are also growing more selective about bonds issued by Big Tech companies to finance AI data center construction. Bloomberg reported that rather than buying such bonds indiscriminately, investors are scrutinizing each issuer's competitive position and financial health before committing capital.

According to a Citigroup analysis, bonds linked to Oracle, Meta, Google and Nvidia have generally tracked their parent companies' share price performance and attracted strong demand. By contrast, some Microsoft bonds issued with a bullet maturity structure — repaid in full at once rather than gradually retired — saw weaker buying interest, reflecting a divergence in investor appetite driven by liquidity risk.