Oracle (ORCL) Drops 15%: Big AI Growth, Ugly Cash Flow

Let’s talk about Oracle and the $90B debt-funded AI bet. Oracle shares sold off as much as 15% after earnings, even though the growth numbers looked strong. Revenue jumped 84% to $4.9B, above the 79% jump analysts expected. Total revenue increased 22% year over year, net income rose, and management pushed the fiscal 2027 revenue forecast up by $1B to $90B, supported by a massive backlog of future contracts. But here’s the catch: Oracle posted over $10B in negative free cash flow over the past 12 months. To fund its OpenAI data center buildout, it raised $5B in convertible offerings and roughly $25B in senior notes. Shares are up around 50% over the past six months and up significantly year-to-date, but rumors are swirling of large impending layoffs and cloud infrastructure margins are thinner than software licenses. Bottom line: Oracle is essentially mortgaging tomorrow’s balance sheet to chase the current AI wave—and execution on OpenAI delivery is everything.