Oracle (NASDAQ: ORCL) releases its latest earnings on Wednesday after the market close, which could set the tone for the next few weeks.
ORCL – Daily Chart
The price of ORCL shares collapsed from a high of $340 in September to below $190. There are technical levels above for a stronger rebound, with the $220 being the first that needs to hold.
Oracle’s first-quarter results in September began the decline in its share price, despite a positive surprise that outweighed a small revenue shortfall. Oracle announced a significant pipeline for its cloud services. Remaining performance obligations (RPO) surged by more than 350% year-on-year (YoY) to $455 billion. The backlog, largely driven by four multi-billion-dollar contracts with three clients, signals considerable future revenue potential. Cloud Infrastructure revenue grew by 55% to $3.3 billion, whilst total cloud revenue was 28% higher at $7.2 billion.
Management forward guidance was also strong, with projected OCI revenue of $18 billion in FY2026, marking 77% growth, before surging to $144 billion by FY2030. Despite this performance, investor confidence was hit by the company’s deteriorating capital structure.
Oracle’s free cash flow turned negative, and the company said it is pursuing approximately $38 billion in additional debt financing to fund its AI development. That would be an addition to the $105 billion of debt seen in the last quarter. Capital expenditure for FY2026 is expected to be $35 billion, representing 65% growth and significantly higher than historical levels.
Credit markets grew nervous about the situation, with Oracle’s five-year credit default swaps jumping to their highest level since 2009. Credit rating agencies also issued negative outlooks and cautioned on leverage. They hinted that the company’s debt could be downgraded, and much now depends on its revenue outlook.
