The selloff was driven by a clash between Oracle's AI ambition and its cash-generation capacity. Fiscal 2026 capital expenditures more than doubled to $55.7 billion from $21.2 billion a year earlier, while operating cash flow rose 54% to $32.0 billion. The result was negative free cash flow of $23.7 billion. Management now plans to raise roughly $40 billion in debt and equity in fiscal 2027, including a $20 billion at-the-market share program, to fund up to $95 billion of capital spending, partly offset by as much as $25 billion of customer repayments.
Investors have weighed that funding gap against a cloud infrastructure business that grew 77% to $18.1 billion in fiscal 2026 and a total revenue increase of 17% to $67.4 billion. Quarterly earnings have beaten expectations — $2.11 per share on $19.18 billion of revenue in the latest period — but the beat has not arrested the decline. The stock trades at a trailing P/E of 27, below peers such as Nvidia at 34 and Microsoft at 30, reflecting skepticism about the payback period on the infrastructure buildout.