oracle The company’s stock price plunged more than 12% in premarket trading Thursday, extending yesterday’s losses after the company reported disappointing financial results.
The cloud computing and database software maker reported lower-than-expected quarterly revenue on Wednesday despite surging demand for its artificial intelligence infrastructure. Sales came in at $16.06 billion, compared to analysts’ expectations of $16.21 billion, according to data compiled by LSEG.
This also dragged down other AI-related names. chip darling Nvidia Last seen in pre-market trading was a 1.4% decline in memory and storage companies. micron Tech heavyweights down 1% microsoft Cloud companies down 0.4% coreweave down 3.9%; AMD It fell into negative territory at 1.3%.
Oracle has been making a lot of noise in the market since it raised $18 billion in a jumbo bond offering in September, making it one of the largest debt issuances in history for the tech industry. The name caught the attention of investors when the company signed a $300 billion deal with OpenAI that same month. Oracle is moving further into cloud infrastructure, competing with big tech companies like Amazon, Microsoft and Google for AI contracts.
But other tech companies have recently issued bonds, leaving investors questioning Oracle’s aggressive plans to build out its AI infrastructure and whether it needs so much debt to do so.
Oracle specifically secured billions of dollars in construction financing through a consortium of banks related to data centers in New Mexico and Wisconsin. Citi analyst Tyler Radke estimates that the company will raise about $20 billion to $30 billion in debt each year over the next three years.
During the company’s earnings call, chief financial officer Doug Kehring pledged to maintain Oracle’s investment-grade debt rating.
“Additionally, we have other financing options through customers who bring chips to be installed in our data centers and suppliers who lease chips rather than sell them,” he said. “Both of these options allow Oracle to synchronize payments and receipts, allowing you to borrow significantly less than most people assume.”
With the new initiatives, Oracle expects to spend about $50 billion in capital spending for the year, up from $35 billion in September, Koehling said. The total amount in 2025 was $21.2 billion.
Free cash flow – a measure of a company’s ability to service its debt that investors are watching as it weathers AI bubble fears – was about $10 billion negative in the November quarter. StreetAccount consensus was -$5.2 billion.
Oracle stock is up 34% year-to-date despite recent losses.
—CNBC’s Seema Mody and Jordan Novet contributed to this report.
