Oracle’s Surging AI Infrastructure Growth Masked by Severe Capital Expenditure Pressures and Bond Market...

Oracle ($ORCL) is experiencing explosive growth in its cloud infrastructure business—posting a 121% increase in OCI revenue, a $664 billion backlog, and $30 billion in new AI contracts—while simultaneously facing acute financing and balance sheet pressures.
Driven by a projected $70 billion in net cash capital expenditures for fiscal 2027, trailing twelve-month free cash flow has turned deeply negative to -$28.72 billion. This heavy spending has triggered strain in the fixed-income market, pushing credit default swaps to record highs, long-term bond yields past 8%, and drawing a credit downgrade warning from S&P to BBB. To manage the capital burden, Oracle is increasingly relying on third-party financing structures and customer prepayments to fund its massive AI data center buildout without overleveraging its own balance sheet.