Oracle said it expects capital expenditures of up to $95 billion in fiscal 2027, well above analyst estimates of $67.66 billion, The Business Times reported. CFO Hilary Maxson said Oracle expects about $70 billion of net cash outlay for capex in fiscal 2027, with another $20 billion to $25 billion coming from customer prepayments and timing effects, which means reported capex will run higher than the cash Oracle actually puts out, ERP Today reported.

She also said Oracle does not expect to raise additional debt funding in calendar 2026, even as the company plans to raise around $40 billion in debt and equity in fiscal 2027, including its previously announced $20 billion at-the-market equity issuance, The Register reported. That distinction matters. Markets were not simply reacting to a bigger spending plan, but to the timing and mix of how Oracle says it will pay for it.

Oracle had already spent about $55.7 billion in fiscal 2026, more than double the $21.2 billion it spent a year earlier, The Register reported. The company also raised $43 billion in debt and $5 billion in equity financing last fiscal year, ERP Today reported, so investors are not being asked to imagine the financing pressure. They have already watched it arrive.

Oracle said the program is tied to AI demand and the datacenters needed to serve it. Clay Magouyrk told analysts the company’s pace of delivery is accelerating, with first-quarter fiscal 2027 delivery approaching 1 gigawatt, nearly matching the capacity delivered in the prior four quarters combined, The Business Times reported.

The physical scale of the buildout is hard to miss. Oracle added around 400 megawatts of capacity in the fourth quarter and expects to add nearly 1 gigawatt in fiscal Q1 2027, The Register reported. Magouyrk said the jump in capex was driven largely by timing, not component prices, though he also noted that Oracle has locked in prices across space, power, energy, labor and components, The Register reported.

That buildout is coming with a margin cost. Maxson said gross margins will “step down” in fiscal 2027 as new datacenter projects ramp before reaching full contractual revenue contribution, The Business Times reported. Oracle later said infrastructure margins should improve once those facilities hit full contractual revenue contribution, but that is a later chapter, not a current comfort blanket, ERP Today reported.

The financing side looks equally demanding. Oracle generated $32 billion in operating cash flow in fiscal 2026, up 54%, but free cash flow was negative $23.7 billion as infrastructure investment accelerated, ERP Today reported. Strong operating cash flow helps, but it does not erase the gap between what Oracle earns and what it is pouring into datacenters.

Oracle’s defense is a giant backlog that makes the quarter look less like a spending spree and more like an industrial-scale contract factory. Remaining performance obligations reached $638 billion at quarter end, up 363% year over year and $85 billion sequentially, surpassing analyst estimates of $592.52 billion, The Business Times reported.

That figure is the best argument for Oracle’s AI strategy. Maxson said for the first time that 12% of the RPO, or $76.56 billion, is expected over the next 12 months, with another 34% or about $216.92 billion expected in the two years after that, The Business Times reported. She also said the record RPO supports confidence in Oracle’s outlook, ERP Today reported.

The risk is concentration. Oracle said it signed $67 billion in AI infrastructure contracts during the quarter, with four customers each committing more than $8 billion, ERP Today reported. The Register said the RPO figure reportedly includes about $300 billion tied to OpenAI alone, The Register reported. On that reading, OpenAI would account for a bit less than half of the $638 billion backlog, but it is still a very large chunk of one company’s future revenue sitting in a single relationship.

Oracle also said most of the RPO increase in the third and fourth quarters came from large AI contracts where customers either prepaid for GPU capacity or supplied their own hardware, ERP Today reported. Oracle said the total value of those prepaid and customer-supplied hardware arrangements reached $75 billion, which helps explain why the company sounds more comfortable with the economics than the market does.

The market’s message was not that Oracle failed to grow. It was that growth is now arriving with a heavier financing tail than investors want to swallow in one sitting. Oracle reaffirmed fiscal 2027 revenue guidance of $90 billion and raised non-GAAP EPS guidance to $8.05, ERP Today reported, while also guiding first-quarter fiscal 2027 revenue growth of 27% to 29% and cloud revenue growth of 58% to 64%, ERP Today reported.

The long-term story is still intact on paper. Oracle reconfirmed its 31% revenue CAGR target and 28% EPS CAGR target through fiscal 2030, ERP Today reported. Maxson pointed to the backlog as evidence that the demand is there; the market is simply asking whether the balance sheet can keep up long enough to realize it.

That is where the selloff sits now. Oracle is building faster, spending more and collecting one of the biggest AI backlogs in the market. The question is no longer whether customers want the compute. It is whether Oracle can finance the race without letting returns get diluted on the way to the finish line.

A Texas Stargate datacenter Oracle is building with OpenAI and others is expected to be more than three-quarters complete within 90 days, The Business Times reported. That site will be one of the clearest tests yet of Oracle’s “build now, earn later” logic. Wall Street, unsurprisingly, is not in a hurry to applaud the idea until the cash shows up.