Last night, after the close of Wall Street, Oracle Corporation lifted the veil on its fourth quarter 2026 accounts: another record quarter, with strong revenue growth in the Cloud Infrastructure and Cloud Applications sectors. However, the stock fell in after-hours trading — and was in the double-digit red in Thursday’s premarket — on higher-than-estimated capital spending, raising concerns among investors about the profitability of the AI infrastructure business.
The numbers for the fourth quarter and the year
Total quarterly revenue rose 21% to $19.2 billion, slightly above forecasts of $19.1 billion.
Cloud (IaaS + SaaS) revenue grew 47% to $9.9 billion, driven by 93% growth in Cloud Infrastructure (IaaS) and 10% growth in Cloud Applications (SaaS). Software revenue fell 2% to $6.8 billion as customers continued to migrate from on-premise software to the cloud. Services revenue was $1.5 billion, up 13%, while hardware revenue was $0.9 billion, up 9%.
Non-GAAP net income attributable to common shareholders reached $6.2 billion, up 26%, corresponding to earnings per share (EPS) rising to $2.11, up 24%, above analysts’ expectations of $1.95.
Total revenue for fiscal 2026 increased 17% to a record $67.4 billion. Cloud revenue increased 39% to $34.0 billion, while software revenue fell 1% to $24.5 billion. Revenues from services amounted to 5.7 billion dollars, up 10%, with a more modest increase in the hardware sector which totaled 3.1 billion, up 5%.
Net income grew 29% to $22.2 billion, corresponding to an EPS of $7.63, up 27%.
Operating cash flow reached a record 32.0 billion (+54%), while free cash flow was negative 23.7 billion in fiscal 2026, due to investments to support the growth of the Cloud Infrastructure business.
Remaining Performance Obligations
Remaining performance obligations, a gauge of bookings, totaled $638 billion at the end of the quarter, compared to an average estimate of $589.5 billion. Oracle said most of the new bookings are for large-scale AI contracts, where the customer has prepaid for the expensive servers needed for the job.
“This substantially reduces the amount of capital Oracle must raise to build our AI data centers,” the company said.
Expectations for 2027
Oracle estimates for Q1 2027 that total revenue will grow 27% to 29% in both constant currency and US dollar terms, with Cloud revenue growing between 57% and 63% in constant currency and 58% to 64% in US dollar terms. Earnings per share are expected to grow between 16% and 19%, reaching between US$1.71 and US$1.75 in constant currency, and between 17% and 20%, reaching a value between US$1.72 and US$1.76.
For fiscal 2027, the company affirmed its previous revenue guidance of $90 billion and raised its EPS guidance to $8.05, representing growth of 18% after adjusting for one-time events related to the sale of our Ampere chip business and Bloom Energy warrants in fiscal 2026.
The crux of capital expenditure to deal with data centers
So far so good, but… but there is a but. And not even that negligible. Capital expenditures, largely related to data center spending, beat forecasts raising concerns among investors and market participants about the profitability of the AI infrastructure business.
Capital expenditures reached $16.5 billion in the fourth quarter, bringing the annual total to $55.7 billion, higher than Oracle’s projection of $50 billion in spending.
The company expects to spend about $70 billion in net capital expenditures in the current fiscal year, which ends in May 2027, Chief Financial Officer Hilary Maxson said on a conference call following the results release. The reported figure will be $20-25 billion higher due to prepayment of some components, he added.
To address capital needs, the company said it raised $43 billion in debt financing and $5 billion in equity capital during the just-ended fiscal year.
In fiscal 2027, the company plans to raise another $40 billion in equity and debt capital, including $20 billion in a previously announced program to periodically sell shares at market prices.
