Oracle's Restructuring Tab Climbs $700 Million as Ellison Halts a $7.5 Billion Share Sale

Oracle's fiscal 2026 overhaul bill rises to about $2.8 billion as BMO cuts its price target to $195; shares fall 3.8%.

Oracle's turnaround is proving costlier than advertised. A regulatory filing disclosed Friday that the software maker will absorb roughly $700 million more in restructuring charges than previously budgeted, lifting the total bill for its fiscal 2026 overhaul to about $2.8 billion. Bloomberg reported that management is also widening the scope of its planned job cuts.

The news lands squarely in the middle of a capital-intensive pivot. Oracle is spending heavily to expand its cloud infrastructure while simultaneously trying to shrink its cost base — and the two efforts are now colliding on the income statement.

Wall Street Trims Its Targets

BMO Capital Markets wasted little time adjusting. On Friday the firm cut its price target on Oracle from $220 to $195, while leaving its existing rating on the shares untouched.

Investors were less measured. The stock fell 3.8% to EUR 124.80, leaving it 13% below its 200-day moving average. That decline extends a rough stretch: the shares have shed 5.1% since last Thursday's quarterly report and are down 24% year to date.

A Quarter That Beat the Street

The operating picture, however, tells a different story. Oracle's fiscal 2027 first-quarter results topped Wall Street's expectations, according to Reuters, with total revenue climbing 30% to $19.3 billion.

Cloud revenue advanced 62% to $11.6 billion, powered by a 121% surge in cloud infrastructure sales to $7.4 billion. Demand for AI cloud services drove triple-digit growth in that segment, easing — at least temporarily — concerns about runaway cash consumption. Free cash flow came in negative at $5.40 billion for the quarter, a smaller outflow than the $9.56 billion analysts had feared, though still a reminder of how much capital the business devours. Building out data center capacity by an additional 850 megawatts carries its own hefty price tag.

The backlog offers the most persuasive counterargument to the skeptics. Remaining performance obligations jumped $209 billion year over year to a record $664 billion. Reuters reported that Oracle booked more than $30 billion in AI cloud contracts during the quarter alone.

Management responded by nudging its fiscal 2027 adjusted earnings guidance to $8.10 per share from $8.05, alongside a revenue target of at least $90 billion. Morgan Stanley raised its price target on the stock on September 8.

Brussels Opens a File

Not all the pressure is financial. Roughly two weeks ago, European Union antitrust authorities began gathering information on Oracle's software licensing and cloud terms as part of a preliminary inquiry, according to Reuters. The shares have slipped 0.8% since. The European review echoes a case involving rival SAP, which settled a similar matter in July. Should the probe escalate into formal proceedings or binding remedies, Oracle's high-margin core licensing business could take a hit.

Ellison Steps Back From the Exit

Then came the surprise. Co-founder and board chairman Larry Ellison cancelled a pre-existing plan to sell as many as 50 million Oracle shares. No stock had been sold under the arrangement before it was scrapped, the company said. Based on Friday's closing price, the transaction would have been worth roughly $7.5 billion.

The move removes a conspicuous overhang at a moment when the market is already questioning how much capital Oracle will need to complete its transition. Whether the expanded restructuring charges ultimately prove to be a one-time drag — or a signal that the retooling is harder than planned — will become clearer when the company next reports. For now, the $664 billion backlog remains the strongest card in Oracle's hand, and the burden falls on management to convert it into cash before patience runs out.