Oracle Dropped 11% After Earnings: The $95B AI Bet No One Is Pricing Right

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(SeaPRwire) –   By: Reginald Vance

Oracle’s $90–$95 billion FY2027 CapEx plan spooked investors right after a blowout quarter. The stock dropped 11% on June 10 after the earnings release. Markets are panicking over compressed free cash flows and a stretched balance sheet. Morningstar cut its fair value estimate from $220 to $207. It rates the stock as fairly valued right now. Few market participants are stopping to value what this spending actually delivers.

Oracle posted Q4 total revenue of $19 billion, up 21% year-over-year. Cloud revenue hit nearly $10 billion, jumping 47% year-over-year. Oracle Cloud Infrastructure grew 77% year-over-year. GPU utilization across Oracle’s global data centers hit 97.5% in Q4. 92% of deployed GPUs are renewed by existing customers. The remaining 8% are claimed by new customers within 90 days. Oracle deployed 1.2 gigawatts of new data center capacity in FY2026. All major expansion projects are on or ahead of schedule. The planned $90–$95 billion spend will add 3 gigawatts of new GPU cloud capacity. Morningstar estimates this will deliver over $30 billion in annual recurring revenue once fully ramped. Oracle’s Bloom Energy partnership eases near-term power supply constraints.

Oracle funds the buildout with $20–$25 billion in customer prepayments. It will raise $40 billion through new debt and equity issuance. It puts $30 billion of its own operating cash toward the project. Oracle raised its FY2027 adjusted EPS guidance to $8.05, 18% higher than last year. That beats Wall Street’s consensus estimate of $8.01. The company reaffirmed its $90 billion FY2027 revenue guidance. It holds long-term targets of 31%+ revenue CAGR and 28%+ EPS CAGR through FY2030. BMO Capital raised its price target to $220 and keeps an Outperform rating. It expects earnings to improve as operating costs normalize in FY2027. Morningstar projects cloud revenue will hit 85% of Oracle’s total by FY2030. OCI will deliver a five-year CAGR of 62% over that period. The ongoing AI capacity shortage will leave all but the largest cloud players locked out of the enterprise AI market.

Author bio: Reginald Vance, a venture partner specializing in semiconductor valuation and advanced materials.