Oracle shares fall over 3% ahead of earnings as AI spending in focus

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Oracle Corp. shares fell more than 3% on Thursday as investors awaited the software and cloud computing giant's quarterly earnings report, due after the US market closes.
The company’s stock has faced pressure this year as investors remain concerned about the huge debt burden Oracle has accumulated while expanding its artificial intelligence infrastructure.
Oracle shares reached a record high exactly a year ago after more than doubling during the previous 12 months. Since that peak, however, the stock has lost more than half its value, making it the eighth-worst performer in the S&P 500 Index.
Although Oracle shares have rebounded 36% from their July low, they are still down 19% in 2026 and are heading for their weakest annual performance since 2008.
At 12:28 p.m. EDT on Thursday, Oracle shares were down 3.44%, or $5.69, at $155.94.
Oracle is widely viewed as having one of the highest levels of exposure to spending risks among major artificial intelligence companies. Those concerns have overshadowed strong growth in its cloud-computing business and a decline in its valuation multiple, which has made the stock appear relatively inexpensive compared with its level a year ago.
The company's debt has risen sharply since the beginning of 2025, while analysts expect Oracle to continue reporting negative free cash flow through 2029.
In July, S&P Global Ratings downgraded Oracle's credit rating to the lowest investment-grade level. Meanwhile, the cost of five-year credit default swaps, which indicates the expense of insuring Oracle's debt against default, recently reached a record high.
Despite the financial concerns, Wall Street analysts are forecasting robust quarterly growth. Oracle is expected to report an approximately 30% increase in earnings per share for its fiscal first quarter, which ended August 31. Revenue is also projected to rise by nearly the same percentage.
Cloud infrastructure revenue is estimated at around $7.2 billion, according to Bloomberg consensus estimates, compared with $3.3 billion in the same quarter a year earlier.
However, the company's aggressive investment programme is expected to weigh heavily on cash flow. Oracle's capital expenditure is forecast to approach $20 billion in the quarter, pushing free cash flow to roughly negative $10 billion, based on the average of analyst estimates compiled by Bloomberg.
Oracle's spending on infrastructure is expected to increase substantially over the coming years as the company expands its capacity to meet demand linked to artificial intelligence.
Capital expenditure is projected to reach nearly $93 billion in fiscal 2027, more than 65% higher than a year earlier. Spending is then expected to exceed $104 billion in fiscal 2028 before declining to around $95 billion the following year.
Free cash flow is forecast to fall to negative $46.6 billion in fiscal 2027, compared with negative $23.7 billion in the previous year.
The earnings report will therefore provide investors with important clues about whether Oracle's strong cloud growth can offset the financial strain created by its massive AI infrastructure investments.
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