Shares in Oracle (NYSE:ORCL) opened nearly 12% lower in Frankfurt trading today, tracking steep losses in U.S. after-hours trading, after the technology giant issued sales and profit forecasts that missed analyst estimates.
The sell-off was fueled by investor anxiety over the massive capital expenditure required to fund the company's aggressive pursuit of AI cloud-computing customers.
Oracle announced that its projected spending on infrastructure would rise by an additional $15 billion compared with earlier estimates, signaling that the rapid monetization of its large AI cloud contracts is not translating into near-term profit as quickly as Wall Street had anticipated.
Oracle's guidance for the current fiscal third quarter and its full-year revenue projection both fell short of the consensus forecasts.
While the company reported a massive $523 billion in Remaining Performance Obligations (RPO)—a figure that signals strong future demand—investors remain focused on the costs of delivering on that backlog.
Commenting on the results, Jefferies noted that the outcome was "mixed with backlog of $523B slightly ahead."
However, the firm added a crucial cautionary point: "Despite management's commitment to its IG (investment-grade) debt rating, AI debt funding concerns were unresolved," though the firm maintained its "buy" rating on the stock.
The market reaction indicates that the high costs associated with becoming a leading AI infrastructure provider are overshadowing the strong growth in contracted revenue for now.