Oracle is making one of the boldest bets in the artificial intelligence race, unveiling plans to spend up to $95 billion on infrastructure in fiscal 2027. The announcement underscores the company’s determination to challenge cloud-computing giants Amazon and Microsoft, but it has also intensified concerns about how Oracle will finance its rapid expansion.
Investors reacted cautiously to the news, sending Oracle’s shares down nearly 9% in extended trading despite the company reporting better-than-expected quarterly earnings and a record-breaking backlog of future business.
Credits: Reuters
A Colossal Investment in AI Infrastructure
As demand for AI computing power continues to surge, Oracle is rapidly expanding its cloud infrastructure footprint. The company revealed that capital expenditures could reach as high as $95 billion in fiscal 2027, significantly above Wall Street expectations.
According to Oracle Chief Financial Officer Hilary Maxson, the company expects to spend approximately $70 billion of its own capital while another $20 billion to $25 billion will be tied to projects that customers are expected to reimburse. Even after accounting for those repayments, Oracle’s spending plans highlight the enormous financial commitments required to compete in the AI era.
The move follows an already aggressive spending year. Oracle spent roughly $55.7 billion during fiscal 2026, surpassing its earlier target of $50 billion.
The Stargate Project Takes Shape
One of Oracle’s most ambitious undertakings is the massive Stargate data center project in Texas, being developed alongside OpenAI and other partners.
Oracle executives said the facility will be more than 75% complete within the next 90 days, marking a major milestone for one of the industry’s most closely watched AI infrastructure projects. At the same time, OpenAI announced that customers will soon be able to access its advanced coding models through Oracle’s cloud platform.
The partnership demonstrates Oracle’s growing role in the AI ecosystem. Beyond OpenAI, the company is also building data centers for major clients such as Meta, reinforcing its position as a serious contender in the cloud infrastructure market.
Oracle executive Clay Magouyrk highlighted the speed of the company’s expansion, noting that fiscal first-quarter 2027 delivery capacity is approaching one gigawatt—nearly matching the total capacity delivered over the previous four quarters combined.
Funding the AI Dream
While Oracle’s growth ambitions are impressive, they come with a hefty price tag.
The company disclosed plans to raise nearly $40 billion through a mix of debt and equity financing in 2027. This figure includes a previously announced $20 billion at-the-market equity issuance.
The financing plans have renewed investor concerns about Oracle’s growing debt burden. Earlier this year, the company had already indicated it could raise up to $50 billion through various funding mechanisms to support its infrastructure expansion.
As AI competition intensifies, cloud providers are increasingly being forced to spend enormous sums on data centers, specialized chips, and networking equipment. Oracle is now embracing the same capital-intensive strategy long employed by larger rivals.
A Record Backlog Signals Strong Demand
Despite concerns over spending, Oracle’s business momentum remains undeniable.
The company reported remaining performance obligations (RPO) of $638 billion, a key measure of contracted future revenue. The figure comfortably exceeded analyst estimates and provides visibility into years of expected growth.
For the first time, Oracle also outlined when that revenue is expected to arrive. Approximately 12% of the backlog, or about $76.6 billion, is expected within the next year, while another 34%—roughly $216.9 billion—is anticipated over the following two years.
These numbers suggest that customer demand for Oracle’s cloud and AI services remains exceptionally strong.
Credits: Reuters
Strong Results, Lingering Questions
Oracle’s latest quarterly results offered further evidence of operational strength. The company reported fourth-quarter revenue of $19.18 billion, slightly ahead of analyst expectations of $19.10 billion. Adjusted earnings per share came in at $2.03, beating forecasts of $1.96.
Yet strong financial performance was overshadowed by investor anxiety surrounding future cash flows. Analysts note that while cloud infrastructure revenue is growing rapidly, free cash flow remains under pressure due to the company’s massive investment cycle.
The central question facing Oracle is no longer whether demand for AI infrastructure exists—it clearly does. Instead, investors are focused on whether the company can fund its unprecedented expansion without placing excessive strain on its balance sheet.
For now, Oracle is betting that the AI boom will justify the cost. The coming years will determine whether that gamble becomes one of the company’s greatest successes—or its biggest financial challenge.
