Oracle maintains its capex forecast and reports cloud growth, sending shares up 7%

Oracle retained its forecast for fiscal 2027 capital expenditure, ranging between $90 billion and $95 billion. The company disclosed a 121% growth in cloud infrastructure revenue during its first-quarter earnings release, leading to a 7% increase in its shares. Oracle emphasized new financing models to address growing pressure to balance AI spending and profitability.

The data center spending forecast remained unaffected. In Q1, Oracle reported capital expenditures of $28.5 billion, a rise from $8.5 billion the previous year. Oracle's capex forecast has remained constant since June. Despite other major cloud companies increasing their AI spending forecasts, Oracle's co-CEO, Clay Magouyrk, emphasized the distinction between direct capex spending and business growth.

Oracle's co-CEO suggested the company needs to separate its direct capex spending from its view of the business's growth potential. Oracle has taken on tens of billions of dollars in debt to fund data centers and chip purchases, facing significant pressure to balance this spending with Wall Street's expectations for profitability.

The company has explored various financing models, such as supplier financing, customer prepayments, and bring your own hardware deals. Reports indicated that Oracle had prepared for potential job cuts to manage its increasing debt due to AI infrastructure investments. Notably, Alphabet and Tesla raised their capex projections in July, causing their stocks to decline, while Meta narrowed its capex forecast range.