Oracle raises capex for AI datacenter buildout

Oracle reported fiscal Q4 revenue of $19.2 billion, up 21% year over year, with cloud revenue up 47% to $9.9 billion and Oracle Cloud Infrastructure (OCI) revenue up 93% to $5.8 billion, according to the company's official earnings release. The number that dominated the earnings call, per CNBC and ERP Today's coverage, was remaining performance obligations (RPO), Oracle's contracted-but-unrecognized revenue backlog, which jumped 363% year over year and $85 billion in Q4 alone to $638 billion, driven largely by large AI infrastructure contracts. Co-CEO Clay Magouyrk said Oracle signed $67 billion in new AI infrastructure contracts in the quarter alone, mostly structured as customer prepayments or bring-your-own-hardware deals.

Fiscal 2026 capital expenditures reached $55.7 billion, up from $21.2 billion the prior year, and CFO Hilary Maxson told investors Oracle expects a net cash outlay for capital expenditures of about $70 billion in fiscal 2027, higher by a further $20 billion to $25 billion once customer prepayments and timing effects are counted. To fund that, Oracle plans to raise about $40 billion in debt and equity in fiscal 2027, on top of $43 billion in debt and $5 billion in equity already raised in fiscal 2026, including a previously announced $20 billion at-the-market equity issuance. Oracle's free cash flow was negative $23.7 billion for the year despite $32 billion in operating cash flow, up 54%. Oracle shares fell roughly 10% in after-hours trading following the results, according to CNBC, as investors weighed the financing plan against the growth story.

Magouyrk said Oracle delivered more than 1.2 gigawatts of new data center capacity in fiscal 2026 and expects to bring nearly 1 gigawatt more online in the first quarter of fiscal 2027 alone, close to matching the prior four quarters combined; global GPU utilization is running at 97.5%. He attributed higher reported capex partly to delivery timing and partly to component costs (memory and SSDs), saying Oracle uses fixed-price contracts where costs are predictable and pass-through pricing where they are not.

For infrastructure and procurement teams, the read-through is less about Oracle specifically and more about market-wide GPU and data-center capacity: with four customers each contracting for more than $8 billion in the quarter and utilization already above 97%, near-term spot availability of large-scale accelerator capacity from major clouds is likely to stay tight. The financing structure, prepaid and bring-your-own-hardware contracts, also means some of the announced backlog reflects capacity customers are effectively pre-funding rather than pure organic cloud growth.

Watch whether Oracle's free-cash-flow deficit narrows as newly delivered capacity converts backlog into recognized revenue, whether the additional $40 billion debt-and-equity raise in fiscal 2027 affects Oracle's credit ratings or borrowing costs, and whether the component-cost pressure Magouyrk flagged shows up in other hyperscalers' capex guidance this earnings season.