Oracle’s stock outlook through 2030 is increasingly tied to whether its artificial-intelligence infrastructure spending can turn contracted cloud demand into cash quickly enough.
Spending accelerated to $28. 5 billion in fiscal 2027’s first quarter, more than three times the year-earlier amount, while management maintained full-year capital-expenditure guidance of $90 billion to $95 billion.
Customer prepayments are helping finance the expansion but have not closed the cash gap. Operating cash flow rose 184% year over year to $23. 1 billion in the first quarter, including $11. 4 billion in customer prepayments, yet free cash flow remained negative at $5. 4 billion for a sixth consecutive quarter. Chief Financial Officer Hilary Maxson said Oracle had not set a specific timetable for returning to positive free cash flow, while arguing that data-center projects become strong free-cash-flow generators after they ramp.
Oracle booked more than $30 billion of additional AI cloud contracts during the quarter, lifting remaining performance obligations to $664 billion. The company also said it had delivered more than 300,000 GPUs to AI cloud customers since the prior quarter and nearly tripled the capacity delivered in the fourth quarter of fiscal 2026. The contracted revenue provides substantial demand visibility, but recognition is spread over years: Oracle expected to recognize about 13% of the backlog over the following 12 months, with roughly half scheduled to become revenue after August 2029.
The costs arrive earlier. Quarterly depreciation increased to $3. 2 billion from $1. 4 billion a year earlier, and management had warned that gross margin would decline during the fiscal year as new data centers move toward full utilization. Oracle sold $20 billion of stock through an at-the-market program during the quarter and expected to raise about $40 billion in debt and equity during fiscal 2027. Average shares outstanding increased 5% year over year, while interest expense rose 55% to $1. 4 billion after the company issued $43 billion of bonds in fiscal 2026.
The valuation case remains contested. Based on management’s fiscal-year adjusted earnings-per-share expectation of $8. 10, Oracle traded at about 16 times earnings, below the S&P 500’s forward multiple of nearly 19 as of Sept. Management also forecasts adjusted earnings per share will compound at 28% annually through fiscal 2030, a result that would challenge the bearish stock view if achieved.
The central issue is timing. Oracle’s cloud business is expanding rapidly, but investors must absorb years of elevated spending, financing needs, dilution and rising depreciation before the infrastructure produces its intended cash returns. On these figures, the case for an S&P 500 fund rests on avoiding that execution and funding risk rather than on a claim that Oracle’s underlying business cannot grow.