Oracle's $70 Billion AI Infrastructure Bet: Prepayments Buy Time as Free Cash Flow Goes Negative
Veröffentlicht: 07.07.2026 um 15:48 Uhr, Redaktion boerse-global.de
Oracle's transformation from a staid database giant into the physical powerhouse of artificial intelligence is unfolding at a staggering cost. The company has laid out plans to spend roughly $70 billion in net capital expenditures during its current fiscal year 2027 — a figure that dwarfs the $55.7 billion already burned through in fiscal 2026. To finance the buildout, management intends to raise $40 billion through a mix of debt and equity, including a $20 billion stock offering already announced. The aggressive bet has left the stock trading at €127.08, down 54.73% from its 52-week high of €280.70.
The scale of Oracle's cash consumption is stark. Free cash flow slumped to negative $23.7 billion in fiscal 2026, even as operating cash flow hit a record $32.0 billion — a 54% jump over the prior year. The gap reflects the sheer weight of infrastructure investment required to power the cloud contracts that now dominate the company's backlog. That backlog currently stands at $638 billion, an eye-popping 363% increase year-over-year, driven in large part by a single blockbuster deal: the $300 billion Stargate computing partnership with OpenAI.
Bullish analysts are betting that customer prepayments will soften the sting. Oracle has already collected $75 billion in advance payments and hardware contributions tied to major AI contracts. Management has argued this reduces the effective capital needed to build out data centers, and it used that cushion to reaffirm its fiscal 2027 revenue guidance of $90 billion while raising its non-GAAP earnings target to $8.05 per share. Piper Sandler has likened Oracle to a high-tech utility, noting that the activation of 2,400 megawatts of new capacity could generate an additional $2.2 billion in Oracle Cloud Infrastructure (OCI) revenue, pushing total OCI sales to $41.1 billion. OCI revenue expanded 47% last year to $9.9 billion, with the infrastructure segment itself surging 93%.
Should investors sell immediately? Or is it worth buying Oracle?
Yet bears point to the other side of the ledger. Total debt has swollen past $130 billion, and the planned $40 billion capital raise will add more. Nearly two-thirds of the backlog is tied to OpenAI through the Stargate deal; any wobble in that relationship could unravel the entire expansion plan. At the same time, UBS analysis shows that roughly 60% of enterprises are scaling back AI spending amid tighter internal approval processes, while internal reports from the U.S. Treasury have drawn comparisons between the current AI frenzy and past speculative bubbles. The stock now trades 21.48% below its 50-day moving average of €160.08, and the 14-day relative strength index is hovering near 31.7 — technically oversold territory that often precedes a floor.
The immediate challenge is whether the money from that $638 billion order book flows in quickly enough to service the mounting debt load. Oracle borrowed $43 billion during fiscal 2026 alone, and bond markets will be watching closely. If rating agencies or investors demand a higher risk premium on future debt issuance, the cost of the $40 billion raise could climb — or force a larger equity component that would further dilute existing shareholders beyond the announced $20 billion offering.
The next concrete test comes with Oracle's fiscal first-quarter 2027 earnings report, due later this year. That report will need to show tangible progress on the $40 billion financing plan and demonstrate that cloud infrastructure billings are accelerating. Analysts remain hopeful, with a consensus price target of €220.67 — implying potential upside of more than 75% from current levels. But barring a swift ramp in cash conversion, the stock risks sliding back toward its February low of €113.86, a level that would erase any remaining premium for the AI bet. For now, Oracle's extraordinary cash burn and its vast prepayment cushion are locked in a race that will define the company's future.
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