For decades, Oracle built its reputation on high-margin enterprise software and a steady stream of licensing revenue. Now the company is attempting a far more capital-intensive transformation—one that increasingly resembles the infrastructure arms race playing out among the world’s largest cloud and artificial intelligence providers.
That transition is placing the roughly $400 billion technology giant under renewed scrutiny as it prepares to report fiscal third-quarter results. While analysts expect strong revenue and earnings growth, investors are increasingly focused on a different set of metrics: rising debt, surging capital expenditures, and a free cash flow profile that has turned negative as Oracle pours billions into data centers and AI infrastructure.
Wall Street forecasts revenue of about $17 billion for the quarter, representing roughly 20% year-on-year growth and aligning with the company’s own guidance of 19% to 21%. Adjusted earnings per share are expected to reach about $1.71, up roughly 16% from a year earlier.
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Yet those solid headline numbers mask deeper financial shifts. Oracle’s stock has already fallen about 20% in 2026, reflecting growing investor debate over whether the company’s massive investment cycle will deliver the long-term growth management is promising.
Layoffs Signal Structural Pivot
Part of Oracle’s restructuring involves reshaping its workforce to support its evolving business model.
The company disclosed last quarter that it had launched a restructuring programme expected to cost as much as $1.6 billion, largely tied to severance payments. To date, Oracle has recorded about $826 million in charges against the plan, leaving roughly $788 million still to be recognized in future periods.
The restructuring comes as Oracle moves away from its traditional enterprise licensing business toward cloud infrastructure and AI services—markets dominated by major rivals including Microsoft, Amazon, and Alphabet.
Reports from Bloomberg indicate that the company could cut thousands of jobs as it reallocates resources toward its cloud computing and data-center operations.
Such workforce reductions are becoming common across the technology sector as companies redirect spending toward artificial intelligence infrastructure.
Perhaps the most closely watched development is Oracle’s rapidly expanding balance sheet. The company finished its most recent fiscal year with $92.6 billion in total debt. By the first half of the current fiscal year, that figure had climbed to $108.1 billion after Oracle issued $18 billion in bonds in September 2025.
The bond offering included notes with maturities stretching from 2030 to 2065, illustrating the long-term financing structure behind Oracle’s infrastructure expansion.
The company has also disclosed future data-center lease commitments of about $248 billion that do not yet appear on its balance sheet. Those obligations represent agreements to secure large-scale computing facilities required to support AI workloads and cloud services.
Investors Weigh The Cost Of The AI Arms Race
Oracle’s spending trajectory mirrors a broader shift across the technology sector as companies race to build computing capacity for artificial intelligence. Firms including Meta Platforms, Alphabet, and Microsoft have dramatically increased capital expenditures to support AI model training, inference workloads, and cloud infrastructure expansion.
Oracle’s capital spending has grown even faster.
Capital expenditures surged from $6.9 billion in fiscal 2024 to $21.2 billion in fiscal 2025, more than tripling in a single year. The company has indicated that spending could reach about $50 billion in the current fiscal year as it builds new data centers and computing clusters.
That expansion has already affected the company’s cash flow profile. In May last year, Oracle reported negative free cash flow of $394 million after its operating cash flow of $20.8 billion was overtaken by capital expenditures of $21.2 billion.
Operating cash flow continues to grow, increasing from $18.7 billion in fiscal 2024 to $20.8 billion in fiscal 2025. Analysts estimate it could reach around $22.3 billion this year. But with capital spending rising even faster, free cash flow is expected to remain under pressure in the near term.
Oracle has acknowledged that negative free cash flow could persist as it continues investing in infrastructure for artificial intelligence.
Executives Defend The Balance Sheet
Company leadership has attempted to reassure investors that the investment cycle is manageable. During the previous earnings call, co-chief executive Clay Magouyrk addressed speculation that Oracle might need to raise as much as $100 billion in additional capital to fund its data-center expansion.
“We’ve been reading a lot of analyst reports, and we’ve read quite a few that show an expectation of upwards of $100 billion for Oracle to go out and kind of complete these build-outs,” Magouyrk said.
“And based on what we see right now, we expect we will need less, if not substantially less money raised than that amount to go and fund this build-out.”
Oracle also emphasized its commitment to maintaining an investment-grade credit rating. Ratings agency Moody’s currently assigns Oracle a Baa2 rating—two notches above junk status but below the ratings held by several major technology peers.
Ellison’s Blueprint For An AI-Driven Oracle
Behind the spending spree is a long-term strategic vision championed by Oracle co-founder and executive chairman Larry Ellison. According to Fortune, Ellison has described the company’s transformation as a three-stage strategy aimed at positioning Oracle at the center of the emerging AI economy.
The first stage involved expanding Oracle’s database technology beyond its own infrastructure and making it available inside rival cloud platforms such as Amazon Web Services, Google, and Microsoft Azure. That strategy allows customers to run Oracle databases even when their broader IT infrastructure relies on competing clouds.
The second stage focuses on “vectorizing” enterprise data—converting information into formats that can be processed efficiently by artificial intelligence models. According to Ellison, this process increases the value of the data stored in Oracle’s systems because it becomes easier for AI applications to analyze.
The final stage involves building what Ellison calls an “AI Lakehouse,” a platform designed to unify and vectorize all corporate data, not just the information stored in Oracle databases.
Ellison believes this approach could unlock a massive new market.
“Training AI models on public data is the largest, fastest-growing business in history,” he told investors previously. “AI models reasoning on private data will be an even larger and more valuable business. Oracle databases contain most of the world’s high-value private data.”
Oracle’s upcoming earnings report, therefore, represents more than a routine quarterly update. It is a test of whether investors remain convinced that the company’s expensive transformation will ultimately pay off.
If Oracle can demonstrate accelerating cloud revenue and strong demand for AI infrastructure, Wall Street may view the current spending surge as a necessary phase in building a long-term growth engine. But if concerns about debt, capital spending, and negative cash flow overshadow the growth narrative, the pressure on the company’s stock could intensify.