Oracle’s Costly AI Expansion Turns Off Wall Street

The costs of Oracle’s AI data center expansion is becoming clear—and Wall Street isn’t happy. The software and cloud firm, which until recently was a solid moneymaker, said Wednesday it burned through $10 billion in cash in the November quarter thanks to a big ramp-up in capital expenditures on AI-focused data centers for its cloud business. Even more troubling for Wall Street: Oracle executives revealed on a conference call with analysts that this fiscal year’s capex would be 43% higher than the company projected last quarter, implying that the company would burn through much more cash in the full year than expected. Oracle shares fell as much as 11% in after-hours trading on Wednesday.

The fact that Oracle’s cloud revenues surged 68% in the quarter, meaningfully faster than in the past few quarters, didn’t seem to register with investors. Neither did Oracle’s revelation that it would generate $4 billion in additional revenue in fiscal 2027, starting in June, thanks to new cloud business it recently booked. That’s a meaningful lift given that analysts had projected fiscal 2027 revenue of $83 billion, according to S&P Global Market Intelligence. While investors last quarter cheered Oracle’s revelations that it had booked massive amounts of new cloud business, coming in through 2030, they’re now more focused on how Oracle will pay for the cost of bringing in that revenue.