Oracle Corporation (ORCL) shares experienced a significant drop, falling over 11% in premarket trading on December 11, 2025. This decline followed the company’s fiscal second-quarter 2026 earnings report, which was released after the market closed on December 10. The stock reached $198.20 at 5:04 AM EST, marking a decrease of $25.08 from its previous closing price of $223.01.
The sharp downturn occurred even though Oracle surpassed earnings per share estimates. Investors expressed considerable concern regarding the company's substantial increases in capital expenditure and cloud revenue figures that narrowly missed Wall Street's expectations. These disappointing results have revived scrutiny over whether Oracle’s debt-financed data center expansion will yield the anticipated returns as swiftly as projected.
Revenue Shortfall Dampens Earnings Beat Amidst Soaring Capital Expenditures
Oracle reported fiscal second-quarter cloud sales totaling $7.98 billion, reflecting a 34% year-over-year increase. However, this figure fell short of analyst estimates. The company's infrastructure business, a key area of focus, generated $4.08 billion in revenue, indicating 68% growth but also missing expectations. Overall revenue reached $16.1 billion, an increase of 14% compared to the prior year period. Non-GAAP earnings per share came in at $2.26, exceeding the estimated $1.64.
Despite the earnings beat, the revenue shortfall became a dominant factor, with investors primarily concerned about Oracle's capacity to translate its aggressive spending into corresponding revenue growth.
The company's Remaining Performance Obligations (RPO) saw a remarkable surge of 438%, reaching $523 billion, which was slightly above the analyst consensus of $519 billion. This growth was significantly driven by substantial commitments from major clients including Meta, NVIDIA, and OpenAI. Capital expenditures for the quarter amounted to approximately $12 billion, an increase from $8.5 billion in the preceding period and notably higher than the $8.25 billion anticipated by analysts.
Oracle has now revised its full-year capital expenditure forecast to $50 billion, a $15 billion upward adjustment from its September projection. This increased spending raises concerns about the company's strategy of aggressive, debt-funded expansion.
Investor Apprehension Grows as AI Buildout Outpaces Cloud Revenue Growth
Analysts and investors have voiced increasing skepticism regarding Oracle's ability to rapidly monetize its extensive data center investments. The company has incurred significant debt and secured leases for numerous data center sites to support artificial intelligence workloads, particularly in its partnership with OpenAI.
The financial markets are closely watching to see if Oracle can achieve revenue growth commensurate with its heightened infrastructure spending, as management has projected. The Q2 results, however, suggest that this revenue conversion may take longer than initially anticipated.
The stock has now declined by approximately one-third of its value since reaching an all-time high on September 10, 2025, a period when investor optimism surrounding Oracle's cloud business was at its peak. Prior to the earnings release, shares were trading at $223.01, but they subsequently fell to a low of $197.25 in extended trading. Concerns have intensified concerning OpenAI's capacity to fulfill its $300 billion compute deal with Oracle, alongside broader questions about whether the substantial investments in AI infrastructure will generate proportional financial returns.
Jacob Bourne, an analyst at Emarketer, commented that Oracle is facing "mounting scrutiny over a debt-fueled data center build-out and concentration risk amid questions over the outcome of AI spending uncertainty."