Oracle stock is tumbling on cloud miss and costly data center plans: What it means for the AI bubble debate

Oracle Corporation reported a 21% year-over-year (YOY) increase in revenue for its fiscal fourth quarter, reaching $19.18 billion, which surpassed Wall Street's estimate of $19.10 billion. Adjusted earnings per share also exceeded expectations at $2.03, compared to a predicted $1.96. Despite these overall positive financial results, Oracle's stock experienced a significant drop of over 10% in premarket trading and was down approximately 9% at publication. This decline was primarily attributed to the company missing its cloud revenue targets. Oracle's cloud revenue for the quarter was $9.91 billion, representing 52% of its total revenue and a 47% YOY increase, but fell short of the $9.97 billion analysts had anticipated. The company also announced plans to raise approximately $40 billion through debt and equity financing in fiscal 2027, with $20 billion coming from a previously disclosed at-the-market equity issuance. This follows $48 billion raised in fiscal 2026. Oracle CFO Hilary Maxson stated these investments are driven by customer demand, particularly for large-scale AI contracts. The company's remaining performance obligations (RPO) surged 363% YOY to $638 billion, largely due to AI contracts where customers prepaid for GPUs or supplied their own hardware, totaling $75 billion in prepaid and customer-supplied hardware for these AI deals.