Oracle stock dropped after it reported disappointing revenues on Wednesday alongside a $15 billion increase in its planned spending on data centers this year to serve artificial intelligence groups.
Shares in Larry Ellison’s database company fell 11 percent in pre-market trading on Thursday after it reported revenues of $16.1 billion in the last quarter, up 14 percent from the previous year, but below analysts’ estimates.
Oracle raised its forecast for capital expenditure this financial year by more than 40 percent to $50 billion. The outlay, largely directed to building data centers, climbed to $12 billion in the quarter, above expectations of $8.4 billion.
Its long-term debt increased to $99.9 billion, up 25 percent from a year ago.
Oracle has launched an aggressive bid to catch up to much larger cloud players such as Google, Amazon, and Microsoft in the race to supply the vast amount of computing power that AI groups including OpenAI and Anthropic need to train and run their models.
Clay Magouyrk, Oracle’s co-chief executive, said its cloud contracts would “quickly add revenue and margin to our infrastructure business” as he defended the vast investments.
Yet the company said it expected full-year revenues to remain unchanged from its previous forecast of $67 billion. It expected to generate $4 billion more in revenue the following fiscal year.
Total bookings for future revenue, known as remaining performance obligations, rose 15 percent to $523 billion in the three months to the end of November, supported by deals with Meta and Nvidia.
Investors initially welcomed the push into AI from Oracle. Shares surged after its last earnings in September when it disclosed it had added more than $300 billion in bookings, largely driven by data center contracts with OpenAI.
But the stock has given up its gains since then as investors worry about the large amounts Oracle will have to borrow and spend on infrastructure for the ChatGPT maker—and concerns over the start-up’s ability to pay for these contracts in the years ahead. OpenAI has struck deals to spend $1.4 trillion over the next eight years on computing power.