Catenaa, Thursday, December 11, 2025- Oracle shares fell by over 14% on Thursday after the company reported a jump in spending on AI data centers and other equipment.
Fiscal second-quarter cloud sales increased 34% to $7.98 billion, while revenue in the company’s closely watched infrastructure business gained 68% to $4.08 billion. Both numbers fell just short of analysts’ estimates.
Known for its database software, Oracle has recently found success in the competitive cloud computing market. It’s engaging in a massive data center build-out to power AI work for OpenAI and also counts companies such as ByteDance TikTok, and Meta Platforms as major cloud customers.
Remaining performance obligation, a measure of bookings, jumped more than fivefold to $523 billion in the quarter, which ended Nov. 30, the company said Wednesday in a statement. Analysts, on average, estimated $519 billion.
Still, Wall Street has raised doubts about the costs and time required to develop AI infrastructure at such a massive scale. Oracle has taken out significant sums of debt and committed to leasing multiple data center sites.
Investors want to see Oracle turn its higher spending on infrastructure into revenue as quickly as it has promised. Capital expenditures, a metric of data center spending, were about $12 billion in the quarter, an increase from $8.5 billion in the preceding period. Analysts anticipated $8.25 billion in capital spending in the quarter.
Oracle now expects capital expenditures will reach about $50 billion in the fiscal year ending in May 2026, a $15 billion increase from its September forecast, executives said on a conference call after the results were released.
“The vast majority of our capex investments are for revenue-generating equipment that is going into our data centers and not for land, buildings, or power that collectively are covered via leases,” Principal Financial Officer Doug Kehring said on the call.
“Oracle does not pay for these leases until the completed data centers and accompanying utilities are delivered to us.”
Annual revenue will be $67 billion, affirming an outlook the company gave in October.
