Oracle's Record Revenue and $638 Billion Backlog Can't Stem Sell-Off Amid $40 Billion Dilution Fears
13.06.2026 - 19:33:10 | boerse-global.de
Oracle shares tumbled more than 14% last week, closing at €159.18 on Friday, even as the company delivered a string of blockbuster financial results. The sell-off was driven by a stark reality check: the enormous capital spending required to build out Oracle's AI infrastructure is spooking investors. The cloud giant plans to raise $40 billion — half through new debt and half via an equity offering — to fund roughly $70 billion in capital expenditures for the coming fiscal year. That dilution prospect overwhelmed the positive news, leaving the stock nearly 10% below its 200-day moving average of €176.66 and still 43% off its all-time high of $280.70 set last September.
The operational picture could hardly be stronger. For the fourth quarter of fiscal 2026, Oracle posted record total revenue of $19.2 billion, a 21% jump year-over-year. Infrastructure-as-a-service revenue surged 93% to $5.8 billion, reflecting insatiable demand for cloud compute power. Adjusted earnings per share hit $2.11, comfortably beating the analyst consensus of $1.96. For the full fiscal year, the company booked a record $67.4 billion in revenue, up 17%. Its contracted backlog soared to an eye-popping $638 billion, with nearly half of that tied to a partnership with OpenAI — a multiyear commitment that locks in long-term growth but also underscores the massive capacity build-out needed.
Adding to the positive headlines was a high-profile government win. On June 11, the U.S. Office of Personnel Management awarded Oracle a roughly $396 million contract to build the first unified human-resources platform for the federal government. The cloud-based HCM solution will replace more than 100 separate legacy systems and serve about 2 million federal employees, with the company claiming taxpayer cost savings of over 90%. The platform covers payroll, benefits, retirement planning and employee self-service — all on a single cloud instance.
Should investors sell immediately? Or is it worth buying Oracle?
But the price of scaling AI infrastructure is becoming impossible to ignore. Last year alone, Oracle's capital expenditures reached nearly $56 billion, and management has guided for about $70 billion in the current fiscal year. The company's free cash flow has turned deeply negative, to almost $24 billion, while total debt continues to climb. The $40 billion capital raise — split evenly between new equity and new borrowings — aims to bridge the funding gap but has alarmed shareholders worried about earnings per share dilution.
Wall Street analysts, however, see the sell-off as a buying opportunity. Guggenheim reiterated a buy rating with a $400 price target, while Citi and Bernstein set targets of $330 and $325, respectively. The company itself has set ambitious long-term goals: it targets $90 billion in revenue for fiscal 2027, with adjusted EPS of $8.05. A dividend payment is also scheduled for July. For now, the market is weighing the tension between record bookings and the enormous capital demands of the AI arms race — a tension that may not resolve until the next earnings report, expected in September.
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