Oracle Q4 2026: Plans to Spend $95 Billion for AI Data Center Expansion

Mirror Review

June 12, 2026

Oracle reported fourth-quarter revenue of $19.2 billion, up 21% year-over-year, beating Wall Street estimates.

Total cloud revenue grew 47% to $9.9 billion, driven by a massive 93% surge in Cloud Infrastructure (IaaS) sales.

However, total cloud sales slightly missed analyst projections of $9.99 billion, causing Oracle stock to decline about 10% in extended trading.

Moreover, to fund its massive artificial intelligence infrastructure expansion, the Oracle Q4 2026 report revealed plans to raise $40 billion through debt and equity financing in fiscal year 2027.

The $95 Billion Cloud Infrastructure Campaign

Oracle is aggressively competing with cloud hyperscalers like Amazon Web Services and Microsoft. The company announced that its total capital expenditures could reach up to $95 billion for fiscal year 2027.

According to Oracle Chief Financial Officer Hilary Maxson, the net cash outlay from Oracle will be around $70 billion. The remaining $20 billion to $25 billion consists of prepayments from major AI clients who are buying or supplying their own graphics processing units (GPUs).

This huge budget follows a fiscal year 2026 where capital expenditures jumped 162% to $55.7 billion, surpassing the company’s original $50 billion target.

A major portion of Oracle’s AI budget supports massive scale.

Oracle CEO Clay Magouyrk stated during an analyst call that the company expects to bring online nearly one gigawatt of computing power in the first quarter of fiscal 2027 alone. This represents roughly the same amount of capacity that Oracle delivered over the previous four quarters combined.

Part of this expansion includes the massive “Stargate” data center in Texas, which Oracle is building in partnership with OpenAI. Management noted that the Stargate facility will be more than three-quarters complete within the next 90 days.

Breakdown of Oracle Q4 Earnings 2026

The Oracle Q4 2026 earnings report showed strong top-line performance, fueled directly by enterprise cloud migration and generative AI training demand.

Key Oracle Q4 2026 Financial Metrics Include:

• Total Revenue: $19.2 billion, representing a 21% increase in USD.
• Adjusted Earnings Per Share (EPS): $2.03 non-GAAP (excluding one-time investment gains), beating the $1.96 expected by analysts.
• Net Income: $4.2 billion, up 23% from $3.43 billion in the prior-year period.
• Operating Cash Flow: Record full-year operating cash flow reached $32.0 billion, up 54%.
• Free Cash Flow: Negative $23.7 billion for the full fiscal year due to aggressive cloud build-out investments.

Oracle’s Cloud Performance Breakdown

While the combined cloud revenue of Oracle missed Wall Street estimates by a slim margin, individual segments showed highly divergent growth paths:

Traditional software licenses and support revenues dropped 2% to $6.8 billion, confirming that enterprise clients are actively moving away from on-premise software to cloud-hosted environments.

Historic Oracle Backlog Growth Fueled by OpenAI

The most striking figure in the Oracle Q4 results 2026 is the astronomical growth of the Oracle backlog, formally known as Remaining Performance Obligations (RPO).

Oracle ended the quarter with an RPO of $638 billion, marking a spectacular 363% increase year-over-year. Sequentially, the backlog grew by $85 billion in just three months.

Analysts at Bank of America highlighted that over 50% of this total remaining performance obligation originates from OpenAI, which signed a multi-year cloud infrastructure partnership.

The company clarified that customers prepaid for GPUs or directly supplied their own hardware in most of these large-scale AI contracts. These prepaid hardware portions total $75 billion, which significantly limits the amount of raw capital Oracle needs to raise independently for building out its facilities.

CFO Hilary Maxson provided a clear timeline for when this contracted backlog will translate into realized revenue:

1. Next 12 Months: Oracle expects to recognize 12% of the backlog, or $76.56 billion.
2. Subsequent 24 Months: The company expects to recognize another 34%, totaling roughly $216.92 billion.

Investor Concerns and Financing Plans

Despite the historic booking numbers, the market reacted with caution, pushing Oracle stock down nearly 10% following the announcement.

The primary concern among institutional investors centers on the massive cash burn required to sustain the Oracle Data Center Expansion, amid the ongoing layoffs.

With free cash flow sitting deep in negative territory at negative $23.7 billion, investors are weighing the long-term returns of AI infrastructure against immediate dilution and rising debt loads.

Jacob Bourne, an analyst at eMarketer, noted that while cloud backlog and infrastructure demand are growing fast, funding the expansion is getting harder with capital expenditures landing well above original consensus estimates.

To secure the necessary capital for its fiscal year 2027 build-out, Oracle plans to raise approximately $40 billion through a combination of debt and equity financing. This funding strategy includes a previously disclosed $20 billion at-the-market equity issuance.

This follows a heavy financing round in fiscal year 2026, during which the firm raised $43 billion in debt and $5 billion in equity.

Management noted that they do not expect to issue any additional debt through the remainder of calendar year 2026.

Furthermore, gross margins are expected to step down slightly in fiscal year 2027 as these massive data center projects ramp up operations.

Oracle’s Future Plans and AI Healthcare Push

Looking ahead, Oracle remains highly optimistic about its long-term market position. The company confidently backed its prior fiscal year 2027 revenue guidance of $90 billion.

For the upcoming first quarter of fiscal year 2027, Oracle projects total revenues to grow between 27% and 29%. Total cloud revenue is expected to climb between 58% and 64% in USD, with non-GAAP EPS expected to land between $1.72 and $1.76.

Beyond raw computing power, Oracle is looking to differentiate its cloud via specialized software vertical integration, particularly in healthcare. The company announced that the Oracle Multicloud AI Database grew 404% in Q4, making it the fastest-growing product business in corporate history.

Oracle also plans to launch a completely new AI-driven version of the Cerner hospital and clinic patient care management system under the Oracle Health suite. Management expects this rollout to push the Oracle Health business into double-digit growth by fiscal year 2027.

The company believes that generative AI models will streamline clinical trials, accelerate molecular drug designs, and allow doctors to spend significantly less time dealing with computer systems and more time treating patients.

End Note

The Oracle Q4 2026 financial results demonstrate a transformation of a legacy software company into an AI cloud powerhouse.

While Wall Street remains nervous about the massive capital intensity, negative free cash flow, and incoming $40 billion financing round, Oracle’s record-breaking $638 billion backlog proves that market demand for AI compute infrastructure is tangible and massive.

By securing deep partnerships with leading AI innovators like OpenAI, Oracle is firmly cemented at the center of the global technology build-out.

Maria Isabel Rodrigues