"Yesterday we highlighted Oracle's massive $455 billion cloud backlog and the question of whether infrastructure spending would finally convert to sustainable margin expansion. This morning, investors are answering decisively. Shares plunged 12% to around $197 in Thursday trading after the company reported a 38.6% earnings beat that came with a $2.7 billion one-time gain, weak guidance, and a stunning $15 billion increase to capital expenditure forecasts."
"Oracle posted adjusted EPS of $2.26 versus the $1.64 estimate, but the headline number obscures the reality. The company booked a $2.7 billion pretax gain from selling its Ampere chip unit to SoftBank. Stripping that out, core earnings would have landed near $1.33, well below expectations. Revenue of $16.06 billion missed the $16.21 billion estimate despite 14% year-over-year growth. Software license revenue dropped 21%, and total software revenue fell 3% to $5.88 billion, missing the $6.06 billion consensus."
"Cloud infrastructure revenue grew 68% to $4.1 billion, accelerating from 55% last quarter. Remaining performance obligations hit $523 billion, up from $455 billion in September but still below the $526 billion Wall Street expected. The real shock came when Principal Financial Officer Doug Kehring announced that fiscal 2026 capital expenditures would reach $50 billion, $15 billion higher than the September guidance of $35 billion. Free cash flow was negative $10 billion in the quarter, marking three consecutive quarters of cash burn."
Shares fell about 12% after adjusted EPS of $2.26 was revealed to include a $2.7 billion pretax gain from selling the Ampere chip unit, leaving core earnings near $1.33. Total revenue of $16.06 billion missed estimates despite 14% growth, with software license revenue down 21% and total software revenue down 3% to $5.88 billion. Cloud infrastructure revenue grew 68% to $4.1 billion and remaining performance obligations rose to $523 billion. Management raised fiscal 2026 capital expenditures to $50 billion, and free cash flow was negative $10 billion, the third consecutive quarter of cash burn.
Read at 24/7 Wall St.
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