Oracle Corp. (NYSE:ORCL) stock fell more than 3% Thursday as investors pulled back from large-cap technology stocks and weighed the company’s aggressive AI spending ahead of its fiscal first-quarter 2027 earnings report.
Oracle is scheduled to release its results after the U.S. market closes Thursday. The Nasdaq dropped 0.96%, the S&P 500 fell 0.58%, and the Technology sector declined 1.3%.
Debt And Cash Flow Pressure Build
Oracle’s earnings will put its AI spending strategy under fresh scrutiny. The company has taken on substantial debt to expand AI infrastructure, while free cash flow is expected to remain negative into 2029. S&P Global Ratings downgraded Oracle in July to the lowest investment-grade rating.
Carnegie Investment Counsel research director Greg Halter, whose firm owns Oracle shares, told Bloomberg, “Oracle is right at the center of the market’s concerns about AI financing, and a lot would have to go right to change that.”
Wall Street expects fiscal first-quarter earnings per share to rise about 30%, with revenue increasing at a similar pace. Cloud infrastructure revenue is projected at about $7.2 billion, up from $3.3 billion a year earlier.
Coastal Bridge Advisors Chief Investment Strategist David Waddell told Bloomberg that investors need proof that Oracle can convert heavy AI investment into returns.
Analysts expect quarterly capital expenditures of nearly $20 billion, pushing free cash flow to roughly negative $10 billion. Fiscal 2027 capex could approach $93 billion, while free cash flow could fall to negative $46.6 billion.
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Analyst Outlook
Oracle carries a Buy consensus rating and an average price forecast of $259.26.
Scotiabank maintained a Sector Outperform rating Wednesday but lowered its price forecast to $215. Citizens maintained a Market Outperform rating and a $285 forecast. Guggenheim maintained its Buy rating Tuesday with a $400 forecast.
Top ETF Exposure
- iShares Expanded Tech-Software Sector ETF (BATS:IGV): 5.51% Weight
- First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV): 5.28% Weight
- REX FANG & Innovation Equity Premium Income ETF (NASDAQ:FEPI): 7.28% Weight
Significance: Because ORCL carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
ORCL Stock Price Activity: Oracle shares were down 3.46% at $156.04 at the time of publication on Thursday, according to Benzinga Pro data.
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