Oracle $ORCL drops 11%; FY2027 funding plan points to $40B raise

Oracle $ORCL fell as much as 11% after its fiscal fourth-quarter update, according to CNBC, even though the company reported higher earnings and revenue. The catalyst was capital intensity: Oracle's own earnings release says FY2026 free cash flow was negative $23.7B and FY2027 funding is expected to total about $40B through debt and equity, including a previously announced $20B at-the-market equity issuance.

The operating numbers were not weak on the surface. Q4 GAAP operating income was $6.1B, up 20%, while non-GAAP operating income was $8.6B, up 22%. Q4 GAAP EPS was $1.45, up 21%, and non-GAAP EPS was $2.11, up 24%. For FY2026, total revenue rose 17% to $67.4B, cloud revenue rose 39% to $34.0B, and operating cash flow reached $32.0B, up 54%.

The stock reaction focused on balance-sheet and cash-flow timing. Remaining performance obligations ended Q4 at $638B, up 363% in USD year over year and up $85B sequentially, with Oracle attributing much of the Q3 and Q4 increase to large AI contracts. The release also says prepaid and customer-supplied hardware portions of large AI contracts total $75B, which management says reduces the capital Oracle must raise for AI datacenters.

What to watch next is the split between debt and equity in the $40B FY2027 plan, the pace of capital expenditures, and whether Q1 FY2027 guidance of 27%-29% revenue growth and $1.72-$1.76 non-GAAP EPS in USD offsets dilution and free-cash-flow concerns.

Not investment advice. Verify all figures with primary sources before acting.