Oracle reported a solid fourth quarter that beat Wall Street estimates, but investors are more focused on what the company plans to spend next year — and it's a lot. Shares of Oracle (ORCL) fell more than 8% in premarket trading Thursday after the company disclosed it expects net capital expenditures of around $70 billion in fiscal 2027 to fuel AI demand.

The tech giant's Q4 results, released after the close Wednesday, showed revenue of $19.18 billion, edging past the $19.10 billion consensus estimate. Revenue grew 21% year over year, powered by strong performance in cloud infrastructure and cloud applications. Adjusted operating income rose 22% to $8.6 billion, and adjusted earnings per share came in at $2.11, beating the $1.96 estimate by a comfortable margin.

Operating cash flow hit $32 billion, up 54% from a year ago, even as the company plowed $48 billion into net capital expenditures during the year. That's a lot of spending, but the company says it's all driven by committed customer demand.

The $70 Billion Question

The big number that caught everyone's attention was the $70 billion in expected net capital expenditures for fiscal 2027. That's a massive jump from the $48 billion spent this year. CFO Hilary Maxson explained on the conference call that this includes customer prepayments and timing impacts of around $20 billion to $25 billion, meaning reported CAPEX will be even higher. But she emphasized that these investments are backed by committed demand.

"We'll continue those investments in our fiscal year 2027 with an expected net cash outlay for capital expenditures of around $70 billion. This includes customer prepayments and timing impacts expected at around 20 to 25 billion dollars, so our reported CAPEX will be higher by this amount. Importantly, these investments are being driven by committed customer demand reflected in our record RPO, giving us confidence in our long-term outlook as well as strong returns on the capital we're deploying," Maxson said.

That record RPO — Remaining Performance Obligations, or the value of contracts not yet recognized as revenue — surged to $638 billion, up 363% year over year. About 12% of that is expected to convert into revenue within the next 12 months, with another 34% over the following 13 to 36 months. During the quarter alone, Oracle signed $67 billion in AI infrastructure contracts, bringing total bring-your-own-hardware and prepaid infrastructure agreements to roughly $75 billion.

Cloud Growth Is Real

Oracle's cloud business continues to be the star. Oracle Cloud Infrastructure (OCI) revenue nearly doubled, rising 93% year over year, as demand for AI computing capacity and database services accelerated. Cloud Applications revenue reached $4.1 billion, up 10%, and SaaS deferred revenue increased 16%. The company's cloud database business expanded 29%, with multi-cloud revenue jumping 404% and multi-cloud bookings climbing 325%.

Over the past 12 months, Oracle has deployed more than 1,000 AI agents across its application portfolio and started introducing AI token-based and outcome-based pricing models. That's a sign the company is trying to monetize AI beyond just selling compute power.

Outlook and the OpenAI Deal

For the first quarter, Oracle guided for adjusted EPS of $1.72 to $1.76, above the $1.68 consensus, and revenue of $18.96 billion to $19.26 billion, compared with expectations of $19.06 billion. Total cloud revenue is expected to grow between 57% and 63% in the quarter. The company affirmed its fiscal 2027 revenue outlook of $90 billion, above the $88.90 billion estimate, and adjusted EPS of $8.05, slightly above the $8.01 consensus.

But there's a catch: gross margins are expected to decline in fiscal 2027 as the company ramps up data center expansion and infrastructure buildouts. That's the price of playing in the AI infrastructure game.

Oracle also said it expects its new AI patient care management system to push the growth rate of its overall Oracle Health business to double digits in fiscal 2027. And the company plans to raise about $40 billion through a combination of debt and equity, including its previously announced $20 billion at-the-market equity issuance.

In a separate announcement Wednesday, Oracle disclosed a new partnership with OpenAI. Enterprises will soon be able to apply eligible Oracle Universal Credits to access OpenAI's frontier models and Codex through OCI, keeping AI deployments inside familiar procurement and governance workflows. Availability begins "in the coming weeks," with customers directed to Oracle sales for timing and eligibility.

So Oracle is spending big, but it's spending on demand that's already been committed. The question is whether investors will eventually see the returns on that $70 billion bet. For now, they're selling first and asking questions later.