US NEWS: Oracle shares fell sharply in premarket trading Thursday, sliding about 13% as investors reacted to quarterly results that came in below Wall Street forecasts.
The company reported revenue of $16.06 billion for the quarter, missing the $16.21 billion that analysts had expected, according to LSEG data. The shortfall came even as demand remains strong for Oracle’s cloud infrastructure used in artificial intelligence applications.
The disappointment rippled through other companies tied to the AI boom. Nvidia shares were down around 1.4% before the opening bell, Micron slipped 1%, Microsoft eased 0.4%, AMD traded 1.3% lower, and cloud infrastructure provider CoreWeave dropped 3.9%.
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Oracle has been expanding aggressively into cloud data centers to capture more AI business, competing directly with giants like Amazon, Microsoft, and Google. The company made headlines earlier this year with a major partnership with OpenAI and a $18 billion bond sale one of the largest in tech history.
That rapid build-out has raised questions on Wall Street about the amount of debt Oracle is taking on. Analysts at Citi estimate the company will need to raise $20 billion to $30 billion in debt each year for the next three years. Oracle has already lined up billions in construction financing for new data centers in New Mexico and Wisconsin.
During Wednesday’s earnings call, Chief Financial Officer Doug Kehring stressed that the company is committed to maintaining its investment-grade credit rating. He also pointed to alternative financing approaches, such as customers bringing their own chips or suppliers leasing equipment instead of selling it outright. Those options, he said, would let Oracle better match spending with incoming revenue and borrow less than many analysts currently project.
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Capital spending is on track to reach roughly $50 billion for the full fiscal year, up significantly from earlier estimates. Free cash flow in the most recent quarter was negative by about $10 billion, worse than the roughly $5.2 billion negative figure analysts had anticipated, fueling concerns about the company’s ability to manage its debt load amid the AI investment surge.
Analysts at Wedbush Securities called the cash-flow pressure “a high-class problem” driven by strong AI demand. They argued that Oracle’s cloud and AI backlog numbers remain robust and that any broad sell-off in the sector looks like a buying opportunity.
Despite the recent pullback, Oracle shares are still up 34% so far this year.