Key Takeaways
- Oracle delivered Q4 revenue of $19 billion, marking a 21% year-over-year increase, while cloud revenue surged 47% to approach $10 billion.
- Shares tumbled 11% following the earnings announcement; Morningstar reduced its fair value assessment to $207 from $220.
- The company intends to deploy $90–$95 billion in capital expenditures during FY2027, significantly higher than the $56 billion spent in FY2026.
- BMO Capital increased its price target to $220 while maintaining an Outperform stance following the quarterly results.
- Oracle boosted its FY2027 adjusted EPS forecast to $8.05, representing an 18% gain, slightly above the Street consensus of $8.01.
Oracle delivered impressive fiscal fourth-quarter results, yet the massive investment required to fuel its artificial intelligence expansion spooked the market. Shares plunged 11% after the June 10 earnings release as Wall Street grappled with the implications of a $90–$95 billion capital spending blueprint on future cash generation.
Quarterly revenue reached $19 billion, representing a 21% climb from the prior-year period. Cloud services emerged as the clear winner, posting 47% growth to nearly $10 billion. Oracle Cloud Infrastructure, commonly known as OCI, expanded by an impressive 77% year-over-year.
GPU utilization throughout Oracle’s worldwide data center infrastructure reached 97.5% during the fourth quarter. Among those graphics processing units, 92% saw contract renewals from current clients, while the remaining 8% were secured by new customers within a three-month window.
Oracle brought online more than 1.2 gigawatts of data center infrastructure throughout fiscal 2026. The company’s largest infrastructure initiatives are progressing on target or exceeding timelines.
Capital Spending Concerns Take Center Stage
The attention-grabbing element wasn’t the revenue performance — it was the investment roadmap. Oracle allocated $56 billion toward capital expenditures in FY2026 and now anticipates that amount will balloon to $90–$95 billion in FY2027.
Morningstar analyst Luke Yang reduced the fair value projection to $207 per share from a previous $220. The downward revision stemmed primarily from the substantial CapEx projections that are expected to squeeze free cash flow generation.
The research firm maintained its three-star “fairly valued” assessment of the shares. Morningstar highlighted that Oracle’s financial position will be stretched near capacity, with approximately $30 billion in capital deployment likely absorbing the majority of operating cash flow.
Oracle intends to finance the infrastructure expansion through $20–$25 billion in advance customer payments, $40 billion via fresh debt and equity offerings, and the balance of $30 billion from operational cash generation.
Wall Street Weighs In
Not all analysts turned cautious. BMO Capital analyst Keith Bachman elevated his price objective to $220 from $200 on June 11, keeping an Outperform recommendation. He anticipates Oracle’s profitability will strengthen in FY2027 as operational expenses moderate.
Oracle confirmed its FY2027 revenue projection of $90 billion and increased its adjusted EPS guidance to $8.05, reflecting an 18% year-over-year advance. Analysts had been modeling $8.01 in EPS and $88.9 billion in revenue.
The enterprise software giant also reiterated its extended-term objectives: revenue compound annual growth exceeding 31% and EPS compound annual growth surpassing 28% through FY2030.
Morningstar forecasts cloud services will comprise approximately 85% of Oracle’s total revenue by FY2030, with OCI expanding at a five-year compound annual growth rate of 62%.
The $90–$95 billion FY2027 capital investment program is projected to activate nearly 3 gigawatts of additional GPU cloud infrastructure, which Morningstar believes could generate more than $30 billion in recurring annual revenue at full capacity.
Oracle’s strategic alliance with Bloom Energy was noted as providing relief for immediate power supply challenges across its data center portfolio.
