Oracle leans on debt as cloud revenue falls short while data-center build continues

Oracle’s cloud infrastructure business posted worse-than-expected revenues of $4.1 billion as the company adds data-center capacity, including a large cluster in Abilene, Texas being built for OpenAI, while relying more heavily on debt to fund the expansion. Net income rose to $6.1 billion in the quarter, helped by a $2.7 billion pre-tax gain from the sale of semiconductor company Ampere to SoftBank.

Oracle added an additional 400 MW of data-center capacity in the quarter, and chief executive of cloud infrastructure Clay Magouyrk said there was ample demand from other clients if OpenAI did not take up the full contracted amount. Analysts and ratings firms have expressed concern about the upfront spending: Moody’s flagged reliance on a small number of large customers, and Morgan Stanley forecasts net debt could rise to about $290 billion by 2028.

The company sold $18 billion of bonds in September and is in talks to raise $38 billion in debt financing, while Jefferies analyst Brent Thill said Oracle’s software business— which generated $5.9 billion in the quarter—provided some buffer but that a timing mismatch between upfront capex and delayed monetization creates near-term pressure.

Oracle says it is renting capacity from data-center specialists to reduce direct borrowing.

Key Topics

Business, Oracle, Abilene Texas, Openai, Data Centers, Ampere