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Oracle shares drop ahead of earnings as AI spending risk eyed

Investors are focused on a forecast around $20 billion in quarterly capital spending, which is expected to keep free cash flow roughly negative through 2029.

Reported · Written up by our desk · Analyst Ratings

Oracle Corp. shares fell more than 3% on Thursday ahead of its quarterly earnings report due after the US market close, as investors weighed the financial impact of heavy spending tied to artificial intelligence demand. LiveMint Markets noted the stock is already under pressure this year amid concerns about a growing debt load related to AI infrastructure expansion.

The company’s shares have lost more than half their value since a record high a year ago, and LiveMint Markets said Oracle is set for its weakest annual performance since 2008, despite rebounding 36% from its July low. By 12:28 p.m. EDT, Oracle shares were down 3.44%, to $155.94.

Analysts expect robust results, with an approximately 30% increase in earnings per share for Oracle’s fiscal first quarter ended August 31, and revenue projected to rise by nearly the same percentage. Bloomberg consensus estimates cited by LiveMint Markets put cloud infrastructure revenue at around $7.2 billion, versus $3.3 billion a year earlier.

Despite the growth outlook, the aggressive investment program is expected to weigh on cash flow, with capital expenditure forecast to approach $20 billion in the quarter and free cash flow remaining roughly negative. LiveMint Markets also pointed to earlier credit pressure, including an S&P Global Ratings downgrade of Oracle to the lowest investment-grade level, and said five-year credit default swap costs reached a record high recently.

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