SAN FRANCISCO — Oracle Corp. shares slumped about 10% in early trading after the enterprise software maker reported fiscal 2026 second-quarter results that missed revenue forecasts and came with a massive jump in its capital spending plans. The latest Oracle earnings release showed revenue rising 14% to $16.1 billion and remaining performance obligations swelling to $523 billion, but underwhelming guidance and a surprise increase in planned capex to $50 billion for fiscal 2026 unnerved investors, Dec. 11, 2025.
AI capex turns Oracle earnings into a high-wire act.
Oracle’s own news release shows total revenue for the quarter ended Nov. 30 rising 14% year over year to $16.1 billion, just shy of analyst expectations near $16.2 billion, while non-GAAP earnings per share jumped 54% to $2.26, helped by a $2.7 billion gain from selling its stake in Ampere. Cloud revenue climbed 34% to $8 billion, with infrastructure-as-a-service sales surging 68% to $4.1 billion even as legacy software revenue slipped, underscoring how dependent Oracle earnings have become on its newer cloud franchises.
More striking than the top line was the backlog. Remaining performance obligations, a measure of contracted but not yet recognized revenue, leapt 438% from a year earlier to $523 billion and rose 15% sequentially, driven by long-term AI infrastructure deals with Meta Platforms, Nvidia, and other hyperscale customers. Oracle executives said the quarter added $68 billion in new bookings. Still, they acknowledged that only a small slice — about $4 billion — is expected to show up as revenue by fiscal 2027, highlighting how slowly some AI mega-contracts convert into cash.
To deliver on those commitments, Oracle lifted its fiscal 2026 capital expenditure plan to roughly $50 billion, up from an earlier $35 billion target and more than double last year’s $21.2 billion spend, much of it earmarked for AI data centers. The Financial Times and other outlets report that quarterly capex alone hit about $12 billion, far above Wall Street’s roughly $8.4 billion expectation, while Oracle’s debt load has swelled to around $100 billion after a major bond sale, raising questions about how long the company can finance this AI buildout without crimping future Oracle earnings power.
Those spending plans, paired with revenue and profit guidance that fell short of consensus, helped send the stock down around 10% in after-hours trading despite the record backlog, according to a Reuters report. Credit-market gauges have also weakened as investors digest a business that is now burning cash and carrying more than $100 billion of obligations, even as management insists it will preserve an investment-grade rating and ultimately grow into the balance sheet.
From AI euphoria to an Oracle earnings reset
This week’s volatility marks a sharp turn from earlier stages of Oracle’s AI pivot. A March 2024 Reuters piece chronicled how the company’s shares hit record highs as AI demand reignited momentum in its cloud business, narrowing the gap with hyperscale rivals and helping justify a richer valuation. Just months later, a June 2024 Reuters story highlighted management’s confidence, as Oracle forecast double-digit fiscal 2025 revenue growth on surging AI-powered cloud demand and announced high-profile partnerships with OpenAI and Google Cloud.
The inflection became more dramatic this fall. Oracle’s September fiscal 2026 first-quarter filing showed remaining performance obligations already at $455 billion, up 359% year over year. It helped trigger a roughly 40% single-day surge in the stock as investors embraced the company as a pure-play AI infrastructure winner. That backdrop makes the latest Oracle earnings reaction feel less like an isolated disappointment and more like a market reassessment of how quickly that half-trillion-dollar pipeline can be turned into profitable growth.
Now, with RPO jumping again to $523 billion while capex guidance balloons to $50 billion, Oracle earnings have become a referendum on the entire “build now, monetize later” AI data-center strategy. Industry site SiliconANGLE notes that the company’s capex this year is expected to more than double last year’s $21.2 billion, even as free cash flow turns negative and investors question the timing of returns from OpenAI and other marquee customers.
For now, Wall Street appears split. Some analysts argue the sell-off simply prices in near-term margin pressure while leaving ample upside if the AI contracts ramp as promised and Oracle can moderate spending after this fiscal year. Others warn that with debt elevated, cash burn accelerating, and broader AI-bubble worries growing, the latest Oracle earnings may be an early warning that the industry’s infrastructure binge is outrunning demand. Either way, the next few quarters will test whether a $523 billion backlog — and a $50 billion capex budget — are signs of durable growth or of an AI arms race that has gone a step too far.
