TL;DR
Oracle told investors it now expects fiscal 2026 capital spending to be about $15 billion higher than after Q1, citing growth in Remaining Performance Obligations tied to AI workloads. The announcement, plus heavy restructuring costs and debt concerns, sent shares down sharply after hours.
What happened
Oracle said during its fiscal Q2 2026 earnings call that expected capital expenditures for FY2026 will rise by roughly $15 billion versus its post-Q1 forecast. Management attributed the increase to a surge in Remaining Performance Obligations (RPO) — contracted services not yet billed — and reported a quarterly backlog increase of $68 billion to a total of $523 billion, driven by commitments from Meta and Nvidia. Revenue for the quarter was $16.1 billion, up 14% year-on-year, with EPS of $2.10, a 91% rise. Cloud revenue grew strongly across segments, but restructuring charges climbed to $406 million, mostly tied to a $1.6 billion restructuring plan. Investors reacted negatively, pushing Oracle shares down more than 11% in after-hours trading; the company faced an earlier 23% drop in November amid questions about its debt-fueled AI buildout. CFO Doug Kehring said multiple financing paths are available, including bonds, banks, private debt and customer or supplier chip arrangements.
Why it matters
- A $15 billion capex increase signals a major near-term investment push to support AI workloads and related infrastructure.
- Rising RPO/backlog reflects strong contracted demand but raises questions about when that deferred revenue will convert to cash.
- Steep restructuring charges and prior borrowing to fund AI efforts are prompting investor concern about Oracle’s leverage and returns.
- How Oracle finances the extra spending could affect its credit profile and shareholder returns.
Key facts
- Oracle now expects FY2026 capital expenditures to be about $15 billion higher than previously forecast after Q1.
- Remaining Performance Obligations (RPO) and backlog rose by $68 billion in the quarter to $523 billion, with Meta and Nvidia cited as drivers.
- Quarterly revenue was $16.1 billion, up 14% year-on-year; GAAP EPS was $2.10, up 91% year-on-year.
- Cloud revenue totaled $8.0 billion (up 34%); cloud infrastructure revenue was $4.1 billion (up 68%); cloud application revenue was $3.9 billion (up 11%).
- Fusion cloud revenue was $1.1 billion (up 18%) and NetSuite Cloud ERP revenue was $1.0 billion (up 13%).
- Restructuring costs reached $406 million for the quarter, a 387% increase year-on-year, linked to a $1.6 billion fiscal 2026 Restructuring Plan.
- Shares fell more than 11% in after-hours trading following the results; Oracle lost about 23% in November amid debt and AI-buildout concerns.
- CFO Doug Kehring said financing options include public bonds, banks, private debt, and possible customer or supplier chip arrangements to reduce borrowing.
What to watch next
- Whether the added RPO converts to cash and revenue as quickly as Oracle expects — not confirmed in the source.
- Whether reported external commitments (including the cited Meta and Nvidia deals) lead to the anticipated capacity utilization — not confirmed in the source.
- Whether customers or suppliers will bring or lease chips to Oracle data centers as a financing offset — not confirmed in the source.
Quick glossary
- Capital expenditures (capex): Spending by a company on physical assets such as data centers, servers, or other infrastructure that supports operations and growth.
- Remaining Performance Obligations (RPO): Value of contracted services that a company has committed to deliver in the future but has not yet recognized as revenue.
- Backlog: Aggregate value of orders or contracts a company has received that are awaiting fulfillment or billing.
- Earnings Per Share (EPS): Company profit allocated to each outstanding share of common stock, typically reported for a fiscal period.
Reader FAQ
Why did Oracle raise its FY2026 capex estimate?
Management said the increase reflects added Remaining Performance Obligations that can be monetized quickly, requiring more capacity for AI workloads.
Did Oracle report growth in revenue and earnings?
Yes. The quarter showed $16.1 billion in revenue (up 14% year-on-year) and EPS of $2.10 (up 91%).
How did investors react to the update?
Oracle shares fell more than 11% in after-hours trading; the company had previously lost about 23% in November amid related concerns.
Is the reported $300 billion OpenAI commitment confirmed?
Not confirmed in the source.
DATABASES 15 Oracle raises AI spending estimate, spooks investors But if you assume cloud IOUs will be fulfilled, business is booming Thomas Claburn Thu 11 Dec 2025 // 00:20 UTC Oracle expects its FY…
Sources
- Oracle raises AI spending estimate, spooks investors
- Oracle shares tumble as higher capex reignites AI bubble fears
- Oracle Shares Drop After Forecast Falls Short and AI …
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