Oracle's U.S. shares fell more than 10% in after-hours trading in New York on the 10th, local time, on concerns about a large expansion in capital expenditures (CAPEX). After closing up 0.67% in the regular session, the stock plunged 11.6% after earnings, to $197.26 in after-hours trading. The decline from the record high in September widened to about 40%.
Oracle said revenue for the second quarter of fiscal 2026 (September to November) rose 14% from a year earlier to $16.1 billion, while adjusted operating income increased 10.5% to $6.7 billion. However, both cloud infrastructure revenue ($4.08 billion, +68%) and other cloud revenue ($7.98 billion, +34%) fell slightly short of market estimates.
Backlog reflecting AI demand increased from $455 billion to $523 billion, but investors focused on capital expenditures, which reflect data center investment. Second-quarter capital expenditures were $12.0 billion, far exceeding both the prior quarter ($8.5 billion) and market expectations. Chief Financial Officer Doug Kehring raised the annual capital expenditure outlook from around $35.0 billion to about $50.0 billion.
Kehring, the CFO, emphasized financial soundness, saying, "Land, buildings, and power are under lease structures, so no expense is incurred until the facilities are completed," but the market is questioning whether such massive investments can be recouped. RBC Capital Markets noted, "Building backlog and converting it into actual revenue are different issues," and said attention should be paid to the funding structure and profitability.
Oracle is pinning hopes on its deal with OpenAI and aggressive expansion of cloud data centers, but analysts say the fact that revenue slightly missed consensus and the company maintained its annual revenue outlook ($67.0 billion) also fueled assessments that results were "disappointing versus expectations."