Oracle shares fell sharply after the software giant disclosed plans for more financing and posted steep negative free cash flow, overshadowing a better-than-expected quarterly report.

The stock dropped 8% on Thursday as investors focused less on Oracle’s earnings beat and more on the company’s growing spending needs tied to its artificial intelligence push. The decline left the shares down about 6% for the year, behind the Nasdaq, which is up roughly 11%.

Oracle said it plans to raise $40 billion through debt and equity financing, including a $20 billion share sale it had already announced. The disclosure added to investor unease after the company raised $43 billion in debt and $5 billion in equity in fiscal 2026. Oracle also reported negative free cash flow of $23.7 billion for the fiscal year.

The company’s capital spending surged as it expanded AI infrastructure. Capital expenditures rose 162% to $55.7 billion. New chief financial officer Hilary Maxson said net cash outlays for capital spending in fiscal 2027 are expected to be about $70 billion, excluding $20 billion to $25 billion in customer prepayments.

Despite the market reaction, Oracle’s latest quarter was strong on paper. Revenue in the fiscal fourth quarter climbed 21% to $19.18 billion, beating the $19.1 billion consensus estimate from LSEG. Adjusted earnings per share came in at $2.03, ahead of analysts’ expectations of $1.96.

The company also gave an upbeat outlook for its business. Oracle maintained its revenue forecast of $90 billion for fiscal 2027 and lifted its adjusted earnings per share target to $8.05. Analysts surveyed by LSEG had expected $88.9 billion in revenue and $8.01 in adjusted earnings per share.

For the fiscal first quarter, Oracle projected adjusted earnings per share of $1.72 to $1.76 and revenue growth of 27% to 29%. That guidance was slightly above analyst expectations for $1.68 in adjusted EPS and $19.06 billion in revenue, according to LSEG.

Cloud infrastructure remained the main growth engine. Revenue from that segment jumped 93% to $5.8 billion. Oracle also said remaining performance obligation, a measure of contracted future revenue, reached $638 billion on May 31, up 363% from a year earlier. StreetAccount had expected $595.67 billion.

Analysts said much of the backlog is tied to major AI customers. Bank of America analysts, who rate the stock a buy, said more than half of the remaining performance obligation comes from OpenAI. Oracle and OpenAI are partners in the Stargate project, an effort to build AI infrastructure in the United States.

Oracle CEO Clay Magouyrk said on the conference call that the company aims to bring almost one gigawatt of computing power online in the current quarter, about the same amount it expects to deploy across fiscal 2026.

Still, Wall Street’s reaction suggests investors are weighing Oracle’s fast-growing cloud business against the cost of funding it. Piper Sandler analysts described the stock as likely to remain controversial, but said they remain constructive on its AI-driven growth and recommend buying the shares.