Oracle Shares Drop After Forecast Falls Short and AI Spending Surges

Oracle's (ORCL, Financials) sales and profit projection for the quarter will be below analyst expectations, sending shares down 10% in extended trade as increased capital investment pressures margins.

The business now estimates adjusted third-quarter profits of $1.64 to $1.68 per share, below the $1.72 average. Revenue growth is expected to be 16%18%, below 19.4%. Oracle's cloud sales estimate fell below forecasts, indicating slower growth in an area it has aggressively entered.

Executives estimated fiscal 2026 capital expenditures at $50 billion, $15 billion more than September's projection, reflecting its AI-focused data-center development. The increased investment raised investor worries about how quickly huge AI infrastructure contracts would generate return.

Second-quarter sales was $16.06 billion, slightly below estimates, but adjusted earnings of $2.26 per share was bolstered by a $2.7 billion gain on Oracle's Ampere Computing stake sale.

The business announced $523 billion in future cloud contracts, up from September but below analyst expectations. Oracle must decide how to fund huge data center obligations, especially those related to OpenAI, in the next quarter.