Oracle maintains its current data center investment strategy, resisting the industry trend of increasing capital expenditure forecasts.
On Thursday, the company disclosed its first-quarter capital expenditures amounting to $28.5 billion, a significant rise from $8.5 billion in the same quarter the previous year. Oracle has sustained its fiscal 2027 capital spending projection at $90 billion to $95 billion, which includes allocations for data centers, keeping in line with the guidance given in June.
While many leading cloud service providers are ramping up their AI-related expenditures to enhance data center and AI capabilities, Microsoft is an exception, having maintained its capital spending forecast unchanged as of July, which coincided with a rise in its stock following earnings announcements.
During an earnings call, co-CEO Clay Magouyrk was questioned about the duration of Oracle’s substantial investment in AI infrastructure. He redirected the focus to how Oracle funds these projects, stating, “We have to separate out in our minds what Oracle spends as capex directly, uncouple that directly from how we think about how the business can grow.”
Oracle’s shares experienced a 7% increase after the company revealed a 121% growth in cloud infrastructure revenue in its first-quarter earnings report, which appeared to alleviate concerns on Wall Street regarding whether data center investments would result in sales.
The company has accumulated tens of billions in debt to finance data centers and chip acquisitions, facing significant pressure to align this spending with profitability expectations from Wall Street.
Oracle reported capital expenditures amounting to $55.7 billion, inclusive of new data centers, for its fiscal year 2026.
To support its funding strategy, Oracle has devised various financing models, such as supplier financing agreements, customer prepayments, and “bring your own hardware” contracts, where customers purchase hardware while Oracle offers cloud infrastructure and operations.
Last month, Business Insider reported that Oracle plans to undertake another series of job cuts to reduce expenses as it incurs significant debt for AI infrastructure development.
Alphabet and Tesla recently increased their capital expenditure projections, causing a drop in their stock prices in July. Meanwhile, Meta narrowed its own capital expenditure forecast range.
