Oracle is preparing to secure one of the largest debt financings ever dedicated to artificial intelligence infrastructure. A $38 billion credit package is set to fund new data centers in Texas and Wisconsin, a move central to supporting its high-profile partnership with OpenAI. This aggressive financing underscores the immense capital required to compete in the AI arms race.
The company’s latest financial results reveal the growth fueling this ambition. For its third fiscal quarter of 2026, Oracle reported total revenue jumped 22% to $17 billion. Cloud revenue surged 44% to $9 billion, with the core cloud infrastructure segment skyrocketing 84% to $5 billion. This performance has powered a significant stock recovery, with shares gaining roughly 26% over the past week to trade near 148 euros. Despite this rebound, the stock remains nearly 47% below its 52-week high of 280.70 euros and is down almost 12% year-to-date.
Behind these numbers lies a staggering commitment to future capacity. Oracle’s remaining performance obligations, a key metric of booked future revenue, hit a record $553 billion. This represents a 325% increase from the prior year, prompting management to raise its fiscal 2027 revenue target to $90 billion. To convert this backlog into actual sales, Oracle is embarking on a construction spree financed through an intricate web of capital.
The $38 billion package is just one piece of a broader strategy. The company plans to raise between $45 and $50 billion in debt and equity throughout 2026. Additional projects include an $18 billion facility in New Mexico and a massive campus in Saline Township, Michigan. The Michigan project, developed by Related Digital with $16 billion in financing anchored by Blackstone and Bank of America, follows a unique model. Oracle will not hold the debt directly; instead, it will lease the completed data center from a special purpose entity, with its rental payments servicing the construction loan.
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This capital-intensive push has a clear impact on the balance sheet. Oracle’s total debt stands at approximately $124 billion. Planned capital expenditures of around $50 billion for the year have pushed its free cash flow into negative territory in early 2026. While revenue and profit expand, liquidity is shrinking.
The immense power demands of AI workloads are driving parallel investments in energy security. Oracle has significantly expanded its power purchase agreement with Bloom Energy, securing up to 2.8 gigawatts of fuel cell capacity for its U.S. sites. Of this, 1.2 gigawatts are already under contract, with deployment scheduled through 2027.
On the product side, Oracle is embedding AI across its software portfolio. New releases include autonomous agents for finance and supply chain, AI integrations for human resources, and enhanced banking solutions for treasury and credit management. This product expansion aligns with a strategic shift that includes workforce changes, such as the planned reduction of approximately 12,000 positions in India.
Analysts are watching the cash flow conversion closely. Citizens Bank maintains a $285 price target, citing Oracle’s ability to translate its substantial backlog into revenue. For the current fourth quarter, Oracle forecasts revenue growth of 18% to 20% and non-GAAP earnings per share between $1.96 and $2.00. The stock currently trades at a price-to-earnings ratio of about 28, notably below its 12-month average of 44. A return to its three-year historical average of 30x would imply a share price near $330, but reaching that level hinges on the new data centers coming online swiftly and meeting the lofty expectations of clients like OpenAI, Meta, xAI, AMD, TikTok, and Nvidia.
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