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June 10 (Reuters) – Oracle’s (ORCL.N), opens new tab capital spending for 2026 exceeded its projection and the cloud computing company said on Wednesday it would raise more debt in 2027, reflecting the staggering scale of cash burn needed to build out its AI infrastructure.
Its shares fell 5.8% in extended trading, after Oracle said it expects to raise nearly $40 billion through a combination of debt and equity financing in 2027. This includes its previously announced $20 billion at-the-market equity issuance.
The company spent about $55.66 billion in 2026, above its target of $50 billion, amid intense investor scrutiny over its rising debt load. Oracle had said in February it aimed to raise as much as $50 billion this year through a combination of debt and equity sales.
Oracle CFO Hilary Maxson told analysts on a conference call that the company’s gross margins will “step down” over its just-begun fiscal 2027 as it ramps up data-center projects.
Oracle also said it now has remaining performance obligations, a key measure of future revenue under contract, of $638 billion, above analyst estimates of $592.52 billion, according to data from Visible Alpha.
Maxson for the first time gave a time frame for how soon Oracle expects that contracted revenue to arrive, saying the company expects 12% of it, or $76.56 billion, over the next 12 months, and another 34%, or about $216.92 billion, in the two years after that.
But how Oracle will fund the capital spending to earn that revenue remains a top concern for investors, said Jacob Bourne, an analyst at eMarketer.
“The demand is real with cloud infrastructure revenue and backlog growing fast. But the funding question is getting harder, not easier, with capex coming in well above estimates and free cash flow still negative,” he said.
The software industry is also contending with growing investor concerns that AI tools could pull enterprise clients away from traditional software by taking over tasks once done by their products.
Oracle reported total revenue of $19.18 billion for the fourth quarter, compared with analysts’ average estimate of $19.10 billion, according to data compiled by LSEG.
Its adjusted profit of $2.03 per share for the quarter exceeded expectations of $1.96.
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