Oracle Reports Lower-Than-Expected Q3 Revenue, Raises Capex Amid AI Infrastructure Spending
Oracle reported Q3 revenue of $16.06 billion, which was below the consensus estimate of $16.21 billion. The company also guided for Q3 adjusted earnings per share of $1.64 to $1.68, falling short of the $1.72 expected by analysts.
Oracle raised its capital expenditure forecast for the 2026 fiscal year to approximately $50 billion, an increase of $15 billion from the previous projection made in September. This raise signals higher spending related to AI infrastructure.
The company booked a pre-tax gain of $2.7 billion from selling its Ampere Computing stake. Despite this, Oracle reported negative free cash flow of about $10 billion last quarter and currently carries approximately $106 billion of debt.
CEO Larry Ellison stated that Oracle is adopting a chip-neutral policy, continuing to purchase GPUs from NVIDIA, and aiming to deploy whatever chips its customers prefer.
Market reaction to the earnings release was negative, with shares dropping roughly 11.5% in after-hours trading. This reflects investor concerns about the profitability of AI investments and Oracle's heavy AI-related spending.
Analysts highlighted that Oracle's increased capital expenditure and ongoing debt-financed investments raise questions about the timeline for achieving AI-driven revenue growth and profitability.
In Japan, shares of SoftBank Group fell about 7.7%, amid concerns that Oracle's AI data-center expenditures could impact SoftBank's involvement in related projects and weigh on the Nikkei 225 index.
