Oracle's Arm Alliance Targets Cost Efficiency as AI Cloud Backlog Balloons to $553 Billion
Published on 06/04/2026 at 14:53 | Redaktion boerse-global.de
Oracle finds itself caught between two powerful forces: demand for AI computing that is off the charts, and a capital spending spree that is burning through cash at an alarming rate. The software giant's answer to that tension lies in an unlikely ally—chip designer Arm—whose new AGI processors promise to slash infrastructure costs while doubling performance per server rack.
The partnership, confirmed by Arm CEO René Haas at the Computex trade show in Taipei, sees Oracle deploying Arm's specialized AGI chips in its data centers to manage complex AI agents, distribute workloads, and retrieve data. Oracle joins social media titan ByteDance as an early adopter of the technology. Arm claims the new processors can cut investment costs by up to $10 billion per gigawatt of capacity, a lifeline for a company whose AI buildout is eating up enormous sums.
Oracle's cloud infrastructure revenue surged 84% to $4.9 billion in the fiscal third quarter, while total cloud revenue hit $8.9 billion. The company's order backlog exploded 325% to a staggering $553 billion, reflecting the sheer scale of long-term commitments from customers hungry for AI compute power. But that growth has come at a steep price: in the first nine months of fiscal 2026, Oracle spent $39.2 billion on capital expenditures, compared with just over $12 billion in the same period a year earlier. Free cash flow has turned deeply negative as a result.
Should investors sell immediately? Or is it worth buying Oracle?
"The company is essentially becoming a real estate manager for data centers," one analyst noted, as Oracle secures power and GPUs to rent out AI capacity. Wall Street, however, remains largely unfazed by the spending splurge. Mizuho recently lifted its price target to $320, citing robust AI demand, while UBS and Scotiabank have also raised their estimates. Of 42 analysts covering the stock, 32 currently rate it a buy.
Oracle shares have been on a tear despite a modest pullback. The stock slipped roughly 3% in Thursday trading to €193.08, but on a monthly basis it has gained about 22%—a figure that closely aligns with the 24% monthly gain noted by other sources. Year-to-date, the shares are up roughly 17%. The 200-day moving average sits comfortably below the current price, confirming the longer-term uptrend remains intact.
All eyes now turn to June 10, when Oracle reports fiscal fourth-quarter earnings. Mizuho expects revenue growth of 17% for the quarter, with that rate potentially doubling in the coming year. Options markets anticipate a post-earnings swing of roughly 12%, and historically Oracle has a tendency to overshoot such expectations. The stock still has ample runway to its 52-week high of about €281—a gap of roughly 30%.
What matters most to investors next week is not just the top line, but the margin story. Management's capital expenditure plans for the new AI infrastructure and the path to profitability will determine whether the hardware-heavy strategy wins market confidence. The Arm partnership gives Oracle a powerful argument for more efficient scaling, but the proof will be in the numbers delivered on Monday.
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