Should You Buy Oracle (ORCL) Stock Following Its Earnings-Driven Decline?

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Oracle delivered Q4 revenue of $19 billion, marking a 21% year-over-year increase, while cloud revenue surged 47% to approach $10 billion.
Shares declined 11% following the earnings announcement; Morningstar reduced its valuation target from $220 to $207 per share.
The company outlined plans for $90–$95 billion in capital spending during FY2027, significantly higher than the $56 billion deployed in FY2026.
BMO Capital increased its target price to $220 while maintaining its Outperform recommendation following the quarterly results.
Management boosted FY2027 adjusted earnings per share guidance to $8.05, representing 18% growth and exceeding Street expectations of $8.01.

Oracle delivered impressive fiscal fourth-quarter results, yet investor anxiety over its aggressive AI infrastructure investment strategy sent shares tumbling. The stock experienced an 11% decline after the June 10 earnings report as market participants grappled with the implications of a $90–$95 billion capital spending blueprint on future cash generation.

Oracle Corporation, ORCL

Quarterly revenue reached $19 billion, representing a 21% year-over-year climb. The cloud segment led performance, advancing 47% to approximately $10 billion. Oracle Cloud Infrastructure, known as OCI, posted exceptional 77% year-over-year expansion.

GPU utilization throughout Oracle’s worldwide data center infrastructure reached 97.5% during Q4. Among those GPUs, 92% were retained by current clients, while new customers claimed the remaining 8% within a 90-day window.

The company brought more than 1.2 gigawatts of data center capacity online during fiscal 2026. Oracle’s most significant infrastructure initiatives are meeting or exceeding their timelines.

Capital Expenditure Concerns

The real attention-grabber wasn’t the revenue performance — it was the infrastructure investment roadmap. Oracle allocated $56 billion toward capital expenditure in FY2026 and projects that amount will escalate to $90–$95 billion in FY2027.

Morningstar analyst Luke Yang adjusted the fair value assessment downward to $207 per share from $220. The revision stemmed primarily from heightened CapEx projections that will constrain free cash flow generation.

The research firm maintained its three-star “fairly valued” assessment. Morningstar highlighted that Oracle’s financial position will be tested, with approximately $30 billion in capital deployment likely to absorb the majority of operating cash generation.

Management intends to finance the expansion through $20–$25 billion in advance customer payments, $40 billion via new debt and equity offerings, and the balance of $30 billion from operations.

Wall Street Perspectives

Not all analysts turned cautious. BMO Capital analyst Keith Bachman elevated his target to $220 from $200 on June 11, retaining an Outperform stance. His thesis centers on Oracle’s earnings expansion in FY2027 as operational efficiencies materialize.

Oracle confirmed its FY2027 revenue projection of $90 billion and elevated its adjusted EPS forecast to $8.05, representing 18% year-over-year growth. Consensus estimates had anticipated $8.01 in EPS and $88.9 billion in revenue.

The company also reaffirmed its extended-term objectives: revenue compound annual growth exceeding 31% and EPS compound annual growth surpassing 28% through FY2030.

Morningstar forecasts that cloud revenue will constitute approximately 85% of Oracle’s total revenue by FY2030, with OCI expanding at a five-year CAGR of 62%.

The $90–$95 billion FY2027 capital investment program is designed to deliver nearly 3 gigawatts of additional GPU cloud infrastructure, which Morningstar believes could generate over $30 billion in recurring annual revenue at full deployment.

Oracle’s collaboration with Bloom Energy was noted as a strategic move to address immediate power supply limitations at its data center facilities.

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