PAAS AND IAAS<\/p>\n
Q4 sales climbed 21%, but Wall Street more interested in $70B buildout bill<\/p>\n
Oracle has lifted capital spending plans above analyst estimates and expanded borrowing to chase the opportunity it says exists in building datacenters for AI workloads.<\/p>\n
Despite revenue for Q4\u00a0 (ended May 31) rising 21 percent year-on-year to $19.2 billion, Oracle’s share price fell as markets reacted to its increasing capex, as analysts raised concerns about how Big Red would fund the investments in datacenters. Capex for fiscal 2026 reached $55.7 billion, up from $21.2 billion a year earlier.<\/p>\n
Speaking to investors, CFO Hilary Maxson said Oracle planned to support its capital investments program by raising around $40 billion in debt and equity in fiscal 2027, including a $20 billion equity issuance already announced. <\/p>\n
“We don’t anticipate raising additional debt funding in calendar year 2026,” she said.<\/p>\n
Last year, Oracle raised $18 billion in debt<\/a> to help fund its massive datacenter investments. Big Red’s market value jumped after it declared $455 billion remaining performance obligations (RPOs)<\/a> \u2013 contracted revenue not yet recognized \u2013 more than 300 percent higher than a year earlier. That figure reportedly includes $300 billion for OpenAI alone<\/a>, as the LLM slinger tries to support its expansion with compute capacity.<\/p>\n Maxson said on an earnings call this week: “In order to unlock this unique growth opportunity, we started a program of capital investments. We’ll continue those investments in our fiscal year 2027, with an expected net cash outlay for capital expenditures of around $70 billion. This includes customer prepayments and timing impacts expected at around $20 billion-$25 billion, so our reported capex will be higher by this amount.”<\/p>\n CEO Clay Magouyrk said any increase in capex was not due to component prices but largely due to timing. <\/p>\n “Part of my job is to figure out ways to actually accelerate capex. My job is to try to spend the money a little bit faster so I can get ramped revenue sometimes. Component prices in general\u2026 I think everyone knows that memory prices have definitely gone up, SSD prices, hard drive prices, etc.”<\/p>\n However, Magouyrk said Oracle had also been able to lock prices “across the spectrum, whether it be space and power costs, energy costs, people costs, component costs.”<\/p>\n Oracle added around 400 MW of capacity in Q4 \u2013 similar to the last two quarters \u2013 and expects to add nearly 1 GW of capacity in fiscal Q1 2027.<\/p>\n