Oracle is spending billions to become a major player in AI cloud infrastructure. Revenue and AI contracts are surging, but the enormous cost of building data centers is putting pressure on its cash flow, financing needs and major projects.
Oracle Stock Is Still Far Below Its 52-Week High
Oracle Stock Is Still Far Below Its 52-Week High
Oracle shares closed at $142.30 on October 2, 2026, after gaining 3.06% during the session. Despite the recent recovery, the stock remains roughly 56% below its 52-week high of $322.54.
The sharp decline has come as investors increasingly focus on the amount of money Oracle needs to spend to build the infrastructure required for the AI boom.
But there is an important twist: Oracle’s underlying AI business is growing extremely quickly.
Oracle’s AI Business Is Growing at Triple-Digit Rates
Oracle reported $19.3 billion in revenue for its fiscal first quarter ended August 31, up 30% from the same period a year earlier.
Cloud revenue increased 62% to $11.6 billion, while Oracle Cloud Infrastructure revenue jumped 121% to $7.4 billion.
The company also signed more than $30 billion in additional AI cloud contracts during the quarter.
That pushed Oracle’s remaining performance obligations, or RPO, to $664 billion — up $209 billion from a year earlier. RPO represents contracted revenue that Oracle has not yet recognized as revenue.
So the problem isn’t a lack of AI demand. The bigger question is how much it will cost Oracle to deliver all that promised computing capacity.
The Cash Flow Problem
Oracle’s free cash flow was negative $5 billion in its latest quarter, despite generating $23 billion in operating cash flow.
The company spent approximately $28.5 billion on capital expenditures during the quarter, as it continued building data centers and purchasing infrastructure for its cloud business.
The situation was even more dramatic for the full fiscal year 2026.
Oracle generated $32 billion in operating cash flow but reported negative free cash flow of $23.7 billion after its heavy investment in cloud infrastructure.
Capital expenditure for fiscal 2026 reached approximately $55.7 billion, compared with $21.2 billion a year earlier.
In other words, Oracle is generating substantial cash from its operations, but its AI infrastructure expansion is consuming even more.
Oracle Raised $43 Billion to Fund the Expansion
To finance its massive AI infrastructure program, Oracle raised $43 billion through debt financing and another $5 billion through equity financing during fiscal 2026.
The company initially expected to raise approximately $40 billion during fiscal 2027 through a combination of debt and equity.
Oracle subsequently completed a $20 billion common-stock sale through its at-the-market equity program during the first quarter of fiscal 2027.
This means Oracle’s AI expansion is being funded through a combination of operating cash flow, debt, equity financing, customer payments and other financing structures.
There Is an Even Bigger Commitment Hiding in the Balance Sheet
Oracle’s latest SEC filing reveals another major number.
As of August 31, the company had approximately $288 billion in additional lease commitments, substantially related to data-center arrangements.
These commitments are generally expected to begin between fiscal 2027 and fiscal 2029 and have terms ranging from 15 to 19 years.
That doesn’t mean Oracle has to immediately pay $288 billion.
But it shows the scale of the long-term financial commitments involved in building out its AI infrastructure.
Project Jupiter Is Becoming a Major Test
One of the biggest concerns is Project Jupiter, a massive data-center campus in New Mexico being developed by STACK Infrastructure, a Blue Owl unit.
The campus is intended to support Oracle’s AI infrastructure commitments, including computing capacity for OpenAI.
Oracle recently issued a force majeure notice related to the project, citing potential delays in securing power for the facility.
A force majeure provision can provide contractual protection when circumstances outside a party’s control interfere with its obligations.
Reuters reported that the notice was connected to delays in securing power for the site. The project is designed around roughly 2.45 gigawatts of capacity
$18 Billion of Project Debt Is Also Under Pressure
Project Jupiter has attracted additional attention because approximately $18 billion in loans are tied to the project.
Reuters, citing Financial Times reporting, said the loans had been quoted at around 89 to 91 cents on the dollar amid concerns about the project’s financing and Oracle’s increasing borrowing requirements.
The financing concerns are part of a broader debate around AI infrastructure.
Companies are signing enormous AI contracts and building data centers at unprecedented speed, but lenders are increasingly examining who carries the financial risk if construction, power availability or demand does not develop as expected.
Reuters reported that the Oracle situation has become a case study for lenders and investors examining how risks are allocated across the rapidly expanding AI infrastructure industry.
Oracle Says the Project Is Still Moving Forward
Despite the concerns, Oracle and Blue Owl have maintained that Project Jupiter remains committed and that the force majeure notice does not change their financial commitment to the project.
Oracle has also continued expanding its data-center capacity.
During its latest quarter, the company said it delivered an additional 850 megawatts of data-center capacity and almost tripled the amount of capacity delivered in the previous quarter.
More recently, reports said flooding reached the Project Jupiter site, although Oracle and STACK said no critical infrastructure had been damaged and the project remained on schedule.
Larry Ellison Cancels $7.5 Billion Share-Sale Plan
Another development involving Oracle’s chairman and CTO, Larry Ellison, has also attracted attention.
Oracle announced on September 12 that Ellison had cancelled a previously established 10b5-1 plan to sell Oracle shares.
Oracle said no shares had been sold under the plan and that Ellison had no other plans to sell his Oracle stock.
The company did not give a reason for the cancellation.
Oracle Is Cutting Costs Too
At the same time that Oracle is spending aggressively on AI infrastructure, it is restructuring parts of the company.
According to Oracle’s latest SEC filing, the company initially estimated up to $2.1 billion in restructuring costs under its fiscal 2026 restructuring plan. After August 31, management added approximately another $700 million of expected costs, bringing the estimated total to about $2.8 billion.
The restructuring includes employee severance, contract termination costs and other measures intended to improve operational efficiency.
Oracle’s filing specifically says the restructuring plan includes the adoption and integration of AI technologies across certain functions and operations.
But Oracle Also Has a Massive AI Backlog
Despite all these financial pressures, Oracle’s AI business has one major advantage: customers are signing enormous contracts.
The company’s RPO reached $664 billion at the end of August, compared with $455 billion a year earlier.
Oracle said a significant portion of the increase came from large cloud contracts, including arrangements where customers prepaid for GPUs or supplied the GPUs themselves. Those customer-prepaid or customer-supplied hardware arrangements totaled approximately $75 billion at the end of fiscal 2026.
That model can reduce the amount of capital Oracle itself needs to raise for certain AI data centers.
The Bigger AI Infrastructure Problem
Oracle’s situation illustrates a broader challenge facing the AI industry.
The demand for AI computing is growing extremely quickly, but meeting that demand requires expensive GPUs, data centers, electricity, cooling systems, networking equipment and long-term infrastructure contracts. Oracle’s numbers show both sides of the story. On one side, cloud infrastructure revenue is growing 121%, AI contracts are pushing its backlog to $664 billion, and the company continues adding data-center capacity. On the other side, free cash flow is negative, capital expenditure is enormous, debt and financing requirements are rising, and some major infrastructure projects are facing power and construction challenges. Oracle has forecast at least $90 billion in revenue for fiscal 2027 and raised its adjusted earnings-per-share target to $8.10. The company also expects second-quarter revenue to grow between 30% and 34%. The story, therefore, isn’t simply that Oracle’s AI business is failing. It’s that Oracle is making one of the industry’s biggest bets on AI infrastructure — and the financial cost of building that infrastructure is arriving long before all of the expected AI revenue does. For Oracle, the coming years will show whether its rapidly growing AI cloud business can generate enough cash to support the enormous infrastructure commitments being made today.
