Oracle Faces Scrutiny as AI Buildout Accelerates

Oracle is rapidly expanding its artificial intelligence and cloud infrastructure ambitions, but the scale and speed of its investment push are raising fresh concerns among investors about long-term financial sustainability.

The company is investing heavily in large-scale data centers and AI infrastructure as it seeks to strengthen its position against major cloud competitors, including Amazon and Microsoft. Oracle is also working with high-profile partners such as Meta Platforms and OpenAI to secure major cloud and AI workloads.

A key highlight of its expansion strategy is the “Stargate” data center project in Texas, developed alongside OpenAI and other partners. Oracle said the facility is progressing rapidly and is expected to be more than three-quarters complete within 90 days. Once operational, it will support access to advanced AI models, including OpenAI’s coding systems, through Oracle’s cloud platform.

Despite strong demand signals, Oracle’s investment pace has intensified sharply. The company expects capital expenditures to reach up to $95 billion in fiscal 2027, with $70 billion funded directly and an additional $20–$25 billion expected to be offset through customer repayments.

This follows a year of already elevated spending, with capital expenditure reaching approximately $55.66 billion in 2026, surpassing earlier projections. The company has also indicated plans to raise significant funds through a combination of debt and equity issuance, further increasing investor attention on its balance sheet.

Chief Financial Officer Hilary Maxson said the company expects margins to come under pressure in the near term as it scales up infrastructure investments. However, she also highlighted the strength of Oracle’s future revenue pipeline, with remaining performance obligations reaching $638 billion—well above analyst expectations.

Of this backlog, Oracle expects about 12% to be recognized within the next year, while a larger portion will be realized over the following years, providing longer-term visibility into revenue growth.