TLDR
- SAP stock dropped more than 4% after Oracle revealed capital spending plans of up to $95 billion for fiscal 2027
- Oracle’s capex guidance far exceeded Wall Street’s estimate of around $67.7 billion
- Oracle plans to raise nearly $40 billion through debt and equity financing in 2027
- Oracle CFO warned gross margins would “step down” as data center buildout accelerates
- SAP’s slide is also tied to profit-taking after its AI-focused Sapphire conference rally and broader software sector pressure
Oracle dropped a bombshell on Wall Street Wednesday evening, and the shockwaves hit SAP hard.
SAP stock fell more than 4% on Thursday after Oracle unveiled capital expenditure plans of up to $95 billion for fiscal 2027. Analysts had pencilled in around $67.7 billion, according to LSEG data. The gap between expectation and reality was enough to send Oracle’s own stock down more than 10% in premarket trading.
Oracle said it expects to recover up to $25 billion of the $95 billion from customer repayments, putting the company’s own net outlay at roughly $70 billion. CFO Hilary Maxson confirmed that figure to analysts on the earnings call.
To fund the buildout, Oracle plans to raise nearly $40 billion through a mix of debt and equity in 2027. That includes a previously announced $20 billion at-the-market equity issuance.
Maxson also warned analysts that gross margins would “step down” in the current fiscal year as Oracle accelerates its data center expansion. That kind of language tends to make investors nervous, and it showed in Thursday’s trading.
Oracle’s Numbers Tell a Bigger Story
Oracle’s Q4 results were actually solid on the top line. Revenue came in at $19.18 billion, just ahead of the $19.10 billion consensus. Adjusted EPS of $2.03 beat the $1.96 estimate.
Cloud services revenue hit $9.9 billion, up 46% year-on-year in constant currency. Oracle Cloud Infrastructure revenue surged 92% to $5.8 billion. Total software revenue edged down 2% in constant currency to $6.8 billion.
The spending plans come as Oracle cements its position in AI infrastructure. The company holds major data center contracts with Meta Platforms and OpenAI, putting it in direct competition with Amazon and Microsoft.
Oracle spent around $55.7 billion in fiscal 2026, already above its own $50 billion target. The 2027 projection makes that look modest by comparison.
Why SAP Got Caught in the Crossfire
SAP didn’t report anything. It didn’t miss anything. But it’s Oracle’s closest European software rival, and when Oracle sneezes, SAP tends to catch a cold.
The sell-off in SAP was also partly its own making. The stock had been riding high after its AI-focused Sapphire conference earlier in the year, and some investors were already looking for a reason to lock in gains. Oracle’s capex shock gave them one.
There are also broader concerns in play. Investors have been watching SAP’s internal AI execution strategy with some skepticism, wondering whether the company can deliver on its ambitions at scale.
SAP’s year-to-date performance was already down around 25% heading into Thursday, and the stock carries a current market cap of approximately $208.4 billion.
No analyst price target changes have been reported following Thursday’s move.
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