Oracle AI Deals Surge But $24bn Cash Gap Hangs Over Shares
Oracle's record US$664bn contracted revenue and a US$24bn annual spending shortfall are locked in a standoff – and Wall Street has already cast its vote, with shares down 55% from their October 2025 peak.
The contracted figure reflects more than US$30bn in fresh AI deals signed last quarter alone, forming an order book that has become the centrepiece of Oracle's bull case.
The deficit captures what the company spent building data centres – US$55.7bn in capital projects in fiscal 2026 – against the US$32bn its operations generated.
Clay Magouyrk, CEO of Oracle, argues the market is reading the wrong line.
He told analysts on this month's earnings call that the company closed more than "US$30bn of additional AI contracts in Q1 without requiring additional capital".
Discussing the firm's AI ambitions, Clay adds: "When I think about where we were a year ago. I don’t think we figured out how we make AI really that useful for ourselves."
When I think about where we were a year ago. I don’t think we figured out how we make AI really that useful for ourselves."
- Oracle's contracted revenue backlog stands at US$664bn, with more than US$30bn in fresh AI deals signed in Q1 alone
- The company spent US$55.7bn on capital projects in fiscal 2026 against US$32bn in operating cash flow, leaving a US$24bn shortfall
- Cloud infrastructure revenue grew 121% last quarter, with 850MW of capacity added
- Oracle's shares trade at roughly 16 times forward earnings, compared with 23 to 27 times for Microsoft, Alphabet, Amazon and Meta
- GPU utilisation across Oracle's new capacity runs at 97.5%, with four customers each signing contracts above US$8bn last quarter
From an OpenAI revenue spike to a Wisconsin grid problem
The week distilled Oracle's entire narrative into two days. Monday brought a 5% share jump after Axios reported OpenAI's annualised revenue had climbed near US$70bn – welcome reading for Oracle, which holds a US$300bn cloud contract with the AI lab.
Wednesday delivered the complication. Infrastructure analyst Aterio flagged a material risk that Project Lighthouse, the 1.3GW campus Vantage Data Centers is building for Oracle in Port Washington, Wisconsin, misses its second-half 2027 delivery target.
Construction is not the problem, with two of four halls already enclosed. The constraint is the grid, as the transmission link requires approval from Wisconsin's utility regulator – a process that restarted from scratch in August.
In the analysis, Javier Reyes, Head of Data Center Research at Aterio, says construction at Port Washington is "progressing steadily", but adds that "power delivery depends on a regulatory process that has restarted".
Oracle has also sent a force majeure notice on its Stargate campus in New Mexico over a delayed gas pipeline, while insisting the project remains on schedule.
How Oracle is bridging the gap – and what it is costing
Closing a US$24bn annual shortfall has required a US$20bn share sale, debt that S&P rates BBB- and US$11.4bn of customer prepayments. The reward for that financial strain is growth few rivals can match: cloud infrastructure revenue rose 121% last quarter and 850MW of capacity was added.
Oracle's shares now trade at roughly 16 times next year's guided earnings of US$8.10, compared with 23 to 27 times for Microsoft, Alphabet, Amazon and Meta.
The company says it expects no further debt this calendar year. The market, however, wants to see the machines pay their own way first.
Oracle's database legacy and the case for patience
The argument for waiting rests on what Oracle already controls. Its databases are embedded inside banks, hospitals and governments where replacing them is a career risk. That proximity to sensitive private data is central to its AI platform pitch.
The new capacity is not sitting idle. Clay told analysts that GPU utilisation runs at 97.5%, and four customers each signed contracts above US$8bn last quarter. About 13% of the US$664bn backlog is due to convert to revenue within a year.
The order book says the future is already sold. The cash flow statement says it has not yet been paid for. Between a Wisconsin substation and a New Mexico pipeline, Oracle is building the bridge.
Oracle's key partners:
Microsoft: Microsoft partners with Oracle to run Oracle Database Services directly inside Microsoft Azure, enabling seamless multicloud integration for shared enterprise customers.
CEO: Satya Nadella | Headquarters: Redmond, Washington, US
NVIDIA: NVIDIA collaborates with Oracle to power Oracle Cloud Infrastructure with advanced GPU architectures, accelerating generative AI and enterprise computing workloads.
CEO: Jensen Huang | Headquarters: Santa Clara, California, US
Accenture: Accenture is a primary global system integrator partner, helping large organisations migrate, implement, and manage Oracle Cloud ERP applications.
CEO: Julie Sweet | Headquarters: Dublin, Ireland
Executives
Clay Magouyrk
CEO
Larry Ellison
Co-Founder, Chairman and Chief Technology Officer at Oracle
Mike Sicilia
Chief Executive Officer