Oracle Corporation (ORCL Quick QuoteORCL - Free Report) is deepening its bet on AI-driven cloud infrastructure, expanding data center capacity across Texas, New Mexico, Wisconsin and Michigan while continuing large-scale funding commitments to support demand for GPU computing. In an August 2026 statement, the company reiterated its approach of building data centers in partnership with state and local governments, framing the expansion as job-creating and community-oriented even as capital outlays climb. Earlier in the year, Oracle also expanded its Oracle Cloud Infrastructure Enterprise AI platform, adding new model options, private endpoint support and dedicated-cloud AI capabilities through its July and August product updates.

The infrastructure push is backed by strong recent results. In its fourth-quarter fiscal 2026 earnings, Oracle reported total quarterly revenues of $19.2 billion, up 21% year over year, with total cloud revenues rising 47% to $9.9 billion. Cloud Infrastructure (IaaS) revenues nearly doubled, climbing 93% to $5.8 billion. Remaining Performance Obligations, a proxy for contracted future business, surged 363% year over year to $638 billion, with most of the increase tied to large AI contracts. For fiscal 2027, Oracle guided to total revenues of roughly $90 billion and non-GAAP EPS growth of 18%.

The trade-off is cash burn. Fiscal 2026 free cash flow was negative $23.7 billion as capital expenditure accelerated, and Oracle raised $43 billion in debt and $5 billion in equity during the year, with plans to raise about $40 billion more in fiscal 2027. Management has said $75 billion of AI contract value is now prepaid or customer-supplied hardware, reducing some funding pressure. Whether this scale of investment converts into durable earnings growth, or strains Oracle's balance sheet before AI demand fully monetizes, remains the central question investors are weighing as the buildout continues into fiscal 2027.

How MSFT & AMZN Compare on AI Infrastructure Spending

Oracle is not alone in stretching its balance sheet for AI capacity. Microsoft's (MSFT Quick QuoteMSFT - Free Report) Azure cloud revenues grew 43% in its fiscal fourth quarter, pushing capital expenditure and finance leases toward roughly $175 billion for calendar 2026, while Microsoft's free cash flow fell 23%. Amazon (AMZN Quick QuoteAMZN - Free Report) raised its 2026 capital spending guidance to about $220 billion as AWS revenues grew 37%, its fastest pace in 18 quarters, though Amazon's free cash flow also turned negative on a trailing basis. Compared with Microsoft and Amazon, Oracle's cloud infrastructure growth rate is faster in percentage terms, but Microsoft and Amazon operate at far larger absolute cloud revenue scale.

ORCL’s Price Performance, Valuation & Estimates

Shares of Oracle have lost 3.5% in the past six-month period, underperforming the Zacks Computer and Technology sector’s appreciation of 20.4%.

ORCL’s 6-Month Price Performance

Image Source: Zacks Investment Research

From a valuation standpoint, ORCL stock is currently trading at a trailing 12-month Price/Earnings ratio of 17.65x, which is lower than the Zacks Computer - Software industry average of 23.62x.

ORCL’s Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for ORCL’s fiscal 2027 earnings is pegged at $8.03, which suggests 5.24% growth year over year.

ORCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.