Oracle posted $19.2 billion in revenue for its fiscal fourth quarter, narrowly edging out the $19.1 billion analysts had expected. But the beat came with a sharp sting: the company cut more than 30,000 jobs over the past three months to free up cash for AI data centers, and shares slid 8% in after-hours trading after management offered flat guidance for the current quarter.
Job cuts and a $70 billion infrastructure bet
The layoffs represent one of the deepest single-quarter reductions in Oracle's history. The company said the cuts were designed to redirect payroll costs toward building out AI infrastructure. Oracle plans to spend $70 billion on data center construction in fiscal 2027 alone. To help fund that, it raised $48 billion in debt and equity in fiscal 2026 and intends to raise another $40 billion in the coming year.
Wall Street's reaction suggests investors are wary of the near-term earnings drag from such heavy capital outlays, even as Oracle's cloud business keeps accelerating.
Cloud revenue surges as OCI more than doubles
Oracle Cloud Infrastructure revenue jumped 93% year-over-year, and total cloud revenue grew 47%. The company's remaining performance obligations — a measure of contracted but not yet recognized revenue — hit $638 billion, a record. Much of that backlog comes from a deal signed with OpenAI: a five-year contract starting in 2027 worth roughly $300 billion, or $60 billion annually, for cloud computing services.
That single contract dwarfs any previous cloud deal in the industry and cements Oracle's position as a top-tier AI infrastructure provider alongside Amazon Web Services, Microsoft Azure, and Google Cloud. Across Big Tech, total AI infrastructure spending reached $650 billion in 2026, according to figures Oracle cited in its earnings call.
Why the flat guidance spooked the market
Oracle's forecast for the coming quarter didn't show the acceleration many hoped for after the OpenAI announcement. Given the $60 billion annual revenue stream locked in starting next year, the flat short-term outlook suggests the company is absorbing costs from the job cuts and data center ramp-up before that contract kicks in. Analysts on the call pressed for details on when the OpenAI revenue would start flowing through the income statement; management said the contract begins in fiscal 2027.
Investors will have to wait until Oracle's next quarterly report to see whether the integration of the new data centers and the reduced workforce can deliver the margins the company is betting on. The first concrete test comes with the fiscal first-quarter earnings release, expected in September.
