American software giant Oracle announced after Wednesday's market close its intention to raise an additional $20 billion through a combination of equity and debt, earmarked for its artificial intelligence infrastructure development.

This move sparked investor concerns over excessive capital expenditure, causing the stock to plunge more than 8% in after-hours trading. The sell-off continued into Thursday's session, with shares ultimately closing down 8.6%.

This decline occurred despite the company reporting record-breaking results for its fiscal fourth quarter, with several metrics hitting all-time highs.

Financial Performance Overview

For the quarter ending May 31, Oracle reported revenue of $19.2 billion, a 21% year-over-year increase that surpassed market expectations of $19.1 billion.

Adjusted earnings per share came in at $2.03, also exceeding the anticipated $1.96.

The cloud infrastructure segment was a standout performer, with revenue surging 93% to $5.8 billion, serving as the primary engine for the company's overall growth.

Future Revenue Indicators

More notably, the company's remaining performance obligations, a key metric for future contracted revenue, reached a record $638 billion by the end of the quarter.

This figure represents a staggering 363% increase compared to the prior year.

The dramatic growth is largely attributed to massive AI-related contracts, with over 50% of the backlog commitments originating from OpenAI.

Significant Capital Expenditure

The cost of sustaining such rapid growth is substantial. Oracle's total capital expenditure for the 2026 fiscal year reached $55.7 billion, exceeding the company's previous forecast of $50 billion.

Management projects capital expenditure for the 2027 fiscal year will climb further to approximately $70 billion.

The 2026 fiscal year saw free cash flow turn negative at $23.7 billion, while depreciation expenses nearly doubled to $7.62 billion.

Funding Strategy

To meet these significant funding requirements, Oracle announced plans to raise roughly $40 billion through debt and equity financing during the 2027 fiscal year.

This total includes the newly announced $20 billion equity offering. In the preceding 2026 fiscal year, the company had already raised $43 billion in debt and $5 billion in equity.

Market Analyst Perspective

Market analysts note that investor apprehension centers on Oracle's financial position relative to other hyperscale cloud providers.

Unlike its peers, Oracle does not possess vast cash reserves, making its financing efforts more susceptible to prevailing market conditions.

While the company's underlying business fundamentals are strong and AI demand is robust, the market's primary concern remains the timeline for generating returns from such a large-scale and ongoing capital investment program.