Oracle’s conference call exacerbated the two biggest reasons why investors are worried about its future

Investors had two major concerns about Oracle heading into its earnings report:

How much debt will the company need to support its ambitious capital expenditure plans?

How quickly will these outlays turn into high-margin business?

Those worries had driven the stock down 30% from its record close on September 10, the session after its last earnings report, and fostered a surge in its credit default swap spreads. Its quarterly results weren’t that helpful in knocking back those questions.

Oracle’s Q2 2026 results showed revenues and cloud computing sales were light compared to expectations, and that capex of $12 billion was $3.8 billion higher than the consensus estimate.

Then, early in the conference call, management said capital spending in this fiscal year (which ends May 31, 2026) would be $15 billion higher than previously envisaged.

Deutsche Bank’s Brad Zelnick asked, “Very specifically, how much money does Oracle need to raise to fund its AI growth plans ahead?” That the reply began with “it’s hard to answer that question exactly” was not particularly encouraging.

Ben Reitzes of Melius Research then noted that the company recently offered guidance for margins among its AI cloud customers to be in the 30% to 40% range over the life of a customer contract. “I guess my question is, how long will it take your AI margins across all your OCI data enters to ramp to that level and what needs to happen to get there?” he asked.

Oracle’s principal financial officer, Doug Kehring, began, “Look, the answer is it really depends.”

The Takeaway

What makes this answer perhaps a little unsatisfying is that recent results do not inspire much confidence in the speed of Oracle’s build-out and, in turn, its ability to turn its massive backlogged RPO into revenues.

“Oracle missing estimates on cloud infrastructure sales — up 66% in constant currency, vs. consensus of 69% — we believe were due to supply constraints that are also affecting other hyperscale cloud providers,” wrote Bloomberg Intelligence analysts Anurag Rana and Andrew Girard.