Oracle's Cloud Growth Is Exploding, but Investors Are Fixated on a $20 Billion Dilution Risk
14.06.2026 - 14:25:17 | boerse-global.de
Oracle delivered a quarter that checked every operational box — record revenue, a cloud business growing at 93% annually, and a backlog that swelled to $638 billion. Yet the stock shed more than 14% in a single week, closing Friday at €159.18. The reason lies not in what Oracle earned, but in how it plans to fund the next phase of its AI infrastructure build-out.
The company's financing strategy has become the dominant concern. For the current fiscal year, Oracle intends to raise approximately $40 billion through a mix of debt and equity. Half of that — a $20 billion program — will come directly from selling new shares into the market. That prospect of severe dilution is weighing on the stock, especially as the share price declines, forcing the company to issue even more shares to meet its target. The risk of a downward spiral is real.
A Quarter That Defied Expectations
The numbers themselves were exceptional. Fourth-quarter revenue for fiscal 2026 hit $19.2 billion, up 21% year over year, with cloud revenue climbing 47% to $9.9 billion. Full-year sales reached $67.4 billion, a 17% gain. Oracle Cloud Infrastructure led the charge with 93% growth, and the company's multicloud AI database surged 404%, which management called the fastest-growing segment in its history.
The remaining performance obligations — a measure of contracted future revenue — skyrocketed 363% to $638 billion, driven almost entirely by AI infrastructure deals. Analysts celebrated the results. The market did not.
Should investors sell immediately? Or is it worth buying Oracle?
The Cash Crunch Behind the Growth
Oracle's operating cash flow rose 54% to a record $32 billion, but free cash flow came in at negative $23.7 billion. The culprit: capital expenditures that jumped 162% to $55.7 billion, well above the company's own guidance. For the coming year, Chief Financial Officer Hilary Maxson has penciled in around $70 billion in capex.
To bridge the gap, Oracle raised $48 billion last year — $43 billion in debt and $5 billion in equity. The interest bill alone now runs $1.4 billion per quarter and is set to climb. With another $40 billion in funding planned for the current year, the focus has shifted from revenue growth to capital structure sustainability.
The OpenAI Concentration in the Backlog
Beneath the headline $638 billion backlog lurks a risk that amplifies the market's unease. Roughly $300 billion of that total — nearly 47% — is tied to a single customer: OpenAI, under the Stargate infrastructure project. Oracle has not confirmed the figure, but the dependency is widely acknowledged. OpenAI retains ownership of its models and the right to switch providers, build its own data centers after a potential IPO, or alter the partnership.
Some offset exists: four separate customers each signed contracts worth more than $8 billion in the fourth quarter alone. GPU utilization stands at 97.5%, and Oracle delivered over 1.2 gigawatts of compute capacity during the fiscal year, with nearly another gigawatt expected in the first quarter of the new year. Revenue follows capacity, so that pipeline should begin to convert soon.
The Quiet Erosion in Core Database
While the AI infrastructure story dominates headlines, Oracle's traditional database business continues to lose ground. Among the leading database vendors of 2011 — Oracle, IBM, Microsoft and SAP — only Microsoft has gained market share over the past 15 years. Amazon, Google Cloud, Snowflake, Databricks and MongoDB have all carved out positions. PostgreSQL became the most popular database among developers in 2023; Oracle ranked ninth in Stack Overflow's usage survey. This structural erosion provides a counterweight to the AI boom and is not going away.
Oracle at a turning point? This analysis reveals what investors need to know now.
Technical Picture and Analyst Views
The stock is clinging to its 50-day moving average of €158.89, offering near-term support, but sits nearly 10% below the 200-day average of €176.66. At €159.18, it is 43% off the 52-week high of €280.70 set in September 2025. The relative strength index stands at 42.4, indicating neutral-to-weak territory without panic selling. Annualized 30-day volatility is near 70%, making large weekly swings a structural feature rather than a bug.
Analysts see an average price target of €220.45, implying roughly 38% upside. That gap between Wall Street's structural thesis and the market's immediate mood underscores the uncertainty. The stock's current valuation reflects not a failure of execution but a fear of how Oracle will pay for its ambition.
Key Dates Ahead
The first-quarter results for fiscal 2027 are due on September 10. In October, Oracle will host an Investor Day in Las Vegas, where management is expected to detail the financial model for the year ahead. Between now and then, the $20 billion equity program will continue to feed new shares into the market, damping any recovery attempts. Investors have made their judgment on the past quarter clear: the numbers were outstanding, but the bill is getting larger. Whether the infrastructure Oracle is building with such enormous capital outlay will deliver the returns to justify the cost is a question that will not be answered until the new capacity starts flowing into revenue.
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