Oracle’s $95 Billion Bet on AI Infrastructure Breeds Skepticism Even as Backlog Swells
Published on 07/04/2026 at 15:53 | Redaktion boerse-global.de
Oracle is finding that building the physical backbone of the global AI economy comes at an excruciating price. The software giant’s transformation from a legacy database vendor to a cloud infrastructure powerhouse has laid bare a daunting trade-off: a record order book versus an eye-watering capital bill. On Friday, shares limped into the weekend at €126.30, up a modest 3% on the day but still down more than 36% over the past month. The stock has nearly halved from its September peak.
A Backlog That Tops Half a Trillion
The revenue pipeline has rarely looked stronger. Oracle’s cloud infrastructure revenue surged 93% last fiscal year, and the company now sits on a contracted backlog of €638 billion. That figure underpins analysts’ most bullish arguments. Yet the costs required to convert those orders into cash are sparking acute market anxiety. Management has flagged capital expenditures of roughly €56 billion for fiscal 2026 – more than double the prior year – and plans to spend up to €95 billion in fiscal 2027. The secondary article notes that the 2027 figure reaches $95 billion in US dollar terms, and that it significantly overshoots the roughly $69 billion analysts had been expecting.
To fund this outlay, Oracle intends to raise as much as $50 billion through a combination of new debt and equity sales. The capital will flow largely into long-term leases for data centers, including a multi-year capacity deal with OpenAI that has been a key driver of the expansion. But the company’s latest annual report warns explicitly that profitability could suffer if affordable data center space proves scarce or if its own AI products underperform. That sobering language has rattled investors who once gave Oracle the benefit of the doubt on growth at any cost.
Defense, Sovereignty, and the Green Upgrade
Away from the broad AI race, Oracle is betting on niches that require heavy upfront spending. The company is expanding its European footprint to comply with the EU’s strict AI Act, with new cloud regions in Madrid and Frankfurt. At the same time, its “Oracle Defense Ecosystem” aims to connect young technology firms with national security agencies. Both initiatives promise long-term strategic advantages but drain free cash flow in the near term.
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Oracle is also overhauling its physical infrastructure. Under “Project Jupiter,” a data center in New Mexico is swapping gas turbines for fuel cells from Bloom Energy, cutting local emissions and water use. The green retrofit adds another layer of cost to the capital budget.
Wall Street’s Split Screen
The technical damage has been severe. The stock trades more than 55% below its 52-week high of roughly €280, and has fallen well beneath its 200-day moving average. The relative strength index has dropped to around 30, a level that typically signals panic selling. Yet the analyst community remains strikingly bullish. The average price target stands at about €221, implying upside of 75%. Mizuho lists Oracle as a top pick for July, and KeyBanc maintains an overweight rating, betting that new AI agents for supply chains and executive coaching will soon be monetized through Oracle’s enterprise software suite.
Investors, however, are fixated on the immediate cash burn. Since the start of the year, the stock has shed roughly 24% of its value, and the market no longer hands out blank checks for revenue growth alone. The challenge for Oracle is to convince the Street that its sprawling infrastructure bet will eventually produce the margins and free cash flow that the backlog promises.
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A Dividend Date on the Horizon
Shareholders can look to July 24 for a small reprieve: Oracle will pay a quarterly dividend of $0.50 per share, with a record date of July 10. But the broader question – whether even a $638 billion order book can justify a $95 billion spending plan – will linger long after that payment arrives. The company stands at a crossroads where operational momentum meets financial discipline, and the market is demanding a clearer map to profitability.
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