Oracle $95B AI capex forecast weighs on SAP, peers

On its earnings call, Oracle told investors it expects fiscal 2027 capital expenditure for AI infrastructure could reach $95 billion. The announcement pushed Oracle shares down about 9% in early U.S. trading; SAP stock fell more than 3%.

In the fourth quarter, Oracle reported cloud revenue rose 47% year over year to $9.9 billion. Oracle Cloud Infrastructure revenue increased 93%. Remaining performance obligations, a measure of contracted future revenue, rose to $638 billion.

Capital spending rose sharply in fiscal 2026, with capex up 162% to $55.7 billion, above Oracle’s prior $50 billion target. The company reported negative free cash flow of $23.7 billion as it built data centers and AI infrastructure.

CFO Hilary Maxson told investors about $70 billion of the potential $95 billion would be Oracle’s own spending, with $20 billion to $25 billion expected to be repaid by customers. She warned gross margins would “step down” in the coming fiscal year as the data-center buildout accelerates.

CEO Clay Magouyrk said first-quarter fiscal 2027 delivery was approaching one gigawatt of capacity, nearly matching the amount delivered in the previous four quarters combined.

Traders reacted to the scale of Oracle’s planned spending rather than weak demand. Market participants priced in the possibility that competitors might need to increase investment to defend market share; SAP has not announced a comparable capex plan.

Analysts noted the sector faces higher costs for AI compute and pressure on funding. Jacob Bourne, an analyst at eMarketer, observed, “The demand is real, with cloud infrastructure revenue and backlog growing fast. But the funding question is getting harder, not easier, with capex coming in well above estimates and free cash flow still negative.”

Analysts had expected fiscal 2027 capex near $67.7 billion; Oracle’s guidance exceeded that figure. The market reaction highlighted investor focus on both revenue growth tied to AI demand and the larger capital commitments companies are reporting.