Oracle Pushes Up Capex Spending on AI: High Risk or High Reward? Oracle Corporation has made a significant infrastructure bet in enterprise technology, with its third-quarter fiscal 2026 results intensifying debates over whether its capital-intensive shift toward AI will yield long-term gains. The company reported total revenues of $17.2 billion for the quarter ended February 28, 2026, representing a 22% year-over-year increase. Cloud revenues rose 44% to $8.9 billion, driven by Oracle Cloud Infrastructure (OCI), which saw 84% growth to $4.9 billion. Non-GAAP earnings per share climbed 21% to $1.79, marking the first quarter in over 15 years where both organic total revenues and non-GAAP EPS grew at 20% or more simultaneously. This milestone highlights Oracle’s ongoing transformation and its focus on scaling cloud and AI capabilities. Despite these gains, the company’s capital expenditure (capex) strategy has drawn scrutiny. Oracle guided its fiscal 2026 capex at $50 billion, a substantial increase from previous years. This aggressive spending has pushed free cash flow into negative territory, raising concerns about its financial sustainability. The risk of overleveraging is evident, as the company faces a heavy debt load and limited near-term cash generation, leaving little room for execution errors. However, the potential rewards are equally compelling. Remaining Performance Obligations (RPO) surged 325% year over year to $553 billion, a contractual backlog largely driven by large-scale AI agreements. Oracle has structured much of this demand to reduce capital strain, with customers either funding equipment upfront or supplying their own hardware.#alphabet #amazon #oracle_corporation #oracle_cloud_infrastructure #zacks_computer_technology_sector
