Oracle Signs $67B AI Contracts While Planning $70B Capex & $40B Funding
ORCL•Oracle signed $67 billion of AI infrastructure contracts last quarter, lifting its remaining backlog to $638 billion. The company plans $70 billion in annual capital spending and will raise $40 billion of debt and equity, even as its shares have dropped 21% and sit 53% below their 52-week high.
1. Oracle's AI Contract Wins
Oracle secured $67 billion in AI infrastructure contracts during its most recent quarter, boosting its remaining performance obligations to $638 billion. This surge reflects 93% growth in its Cloud Infrastructure business, driven by customer demand for AI workloads.
2. Valuation Disconnect
Despite the record backlog and cloud momentum, Oracle's shares have declined 21% over the past month and trade 53% below their 52-week high. The stock now commands a 27.9 price-to-earnings ratio, versus the S&P 500's 24.4, and a 7.1 price-to-sales ratio, more than double the market average.
3. Funding and Execution Risk
To support its cloud build-out, Oracle plans $70 billion of capital expenditures next fiscal year and intends to raise $40 billion through debt and equity. Its debt-to-market-value ratio stands at 33.8% compared with the S&P 500’s 20.8%, underscoring significant leverage and execution risk.
