Oracle Plans $70B Capex with $40B Financing, Margins to Decline
ORCL•Oracle plans a $70 billion net cash outlay for fiscal 2027 capex, up from $48 billion last year, funded by about $40 billion in new debt and equity. Management warns gross margins will decline and free cash flow stays negative through FY2028 as data center build-out ramps.
1. Fiscal 2027 Capex Surge
Oracle expects net cash outlay for capital expenditures to reach $70 billion in fiscal 2027, a 46% increase from the $48 billion spent in fiscal 2026. The firm plans to raise roughly $40 billion through new debt and equity to fund its hyperscale AI infrastructure expansion.
2. Profitability and Cash Flow Impact
Management projects gross margins to decline in fiscal 2027 and free cash flow to remain negative through FY2028 as spending ramps. This strategy shifts the company’s financial model toward heavy upfront investment at the expense of near-term profitability.
3. Revenue Growth Dependent on Execution
Oracle’s guidance targets 34% total revenue growth in fiscal 2027, backed by a remaining performance obligation backlog of $638 billion. Any delays in data center build-out could disrupt the timeline for turning this backlog into recognized revenue and profits.
