ORCL: Oracle Stock Plummets 12% as AI Spending Rises but Revenue Misses Target

Data centers are set to gobble up $15 billion more than planned. But revenue was just shy of Wall Street’s models.

📉 Oracle Tanks on Revenue Miss

• Oracle stock ORCL plunged 12% in pre-market Thursday after quarterly revenue came in at $16.06 billion. It’s solid 14% growth, but still shy of the $16.2 billion Wall Street expected.
• Adjusted EPS of $2.26 crushed estimates, but traders focused on the top-line disappointment, especially given the company’s massive AI commitments.
• Despite this drop, Oracle shares remain up 30% year-to-date, though that September OpenAI-fueled rally has fully evaporated.

🏗️ AI Spending Blows Out Forecasts

• Oracle hiked its capex plans by $15 billion, lifting data center spending to $50 billion for the year – a 40% jump driven by AI infrastructure demand.
• Ellison’s bet: build fast, build huge, and lock in future cloud and AI business. But near-term margins? They’re taking a back seat right now.
• Investors reacted to the spending surge as a double-edged sword – big long-term opportunity, big short-term pain.

📊 Backlog Explodes. Future Bright?

• Oracle’s RPOs (signed but not yet recognized revenue) shot to $528 billion, up a staggering 438% year over year, and a big climb from last quarter’s $455 billion. The pipeline is overflowing.
• That backlog shows demand is real, even if current revenue timing disappointed. AI clients are committing, no doubt. But the question is how fast those commitments convert into reported dollars.