On Wednesday, Oracle announced revenue and profit forecasts that fell short of analysts’ expectations. At the same time, the company announced it would increase spending by $15 billion (€12.8 billion). Oracle’s share price fell by 10 percent in after-hours trading.
Oracle plays a prominent role in the AI race with ambitious plans to build AI cloud data centers. The company previously signed a five-year, $300 billion contract with OpenAI. The financial results are seen as an indicator of whether there is an AI bubble and how Oracle intends to finance the necessary infrastructure.
Revenue and profit below expectations
For the current fiscal third quarter, Oracle forecasts adjusted earnings between $1.64 and $1.68 per share. That remains below analysts’ expectations of $1.72 per share. The revenue growth forecast of 16 to 18 percent also lags behind the estimated 19.4 percent growth to $16.87 billion.
The recently concluded fiscal second quarter shows a similar picture. Oracle reported total revenue of $16.06 billion, while analysts had expected an average of $16.21 billion. Adjusted operating profit of $6.7 billion also fell short of the average target of $6.8 billion.
Oracle’s management anticipates capital expenditures for fiscal year 2026 will be $15 billion higher than the $35 billion the company estimated in September during its first-quarter earnings report. This increased spending is related to Oracle’s large-scale AI infrastructure investments. The company is building several new data centers in various locations across the United States as part of the Stargate project.
During a conference call, CEO Clay Magouyrk was asked how Oracle will finance the construction of the data centers needed for the cloud contracts. “We have some other interesting models that we’ve been working on,” he said. “One of them is that customers can actually bring their own chips, and in those models, Oracle obviously doesn’t have to incur any capital expenditures upfront for that model.”