Oracle disclosed unit economics for a large AI infrastructure contract at its Investor Day on October 28, 2026. It also capped external financing for AI projects at $20 billion, and its shares jumped on the day.
Oracle disclosed approximately $80 billion in remaining performance obligations on a large AI infrastructure contract at its Investor Day on October 28, 2026. Oracle shares jumped by roughly 11 to 13% on the day as financing concerns eased.
The math behind one gigawatt
The contract carries an estimated total capital expenditure of around $37 billion. Once fully ramped, the buildout is anticipated to bring in roughly $16 billion in annual revenue, a level that corresponds to about 1 gigawatt (GW) of capacity.
Oracle expects the contracts to run for an average of five years. It targets a gross margin of approximately 35% and an operating margin of around 34%.
The bigger number may be the return: Oracle projects a return on investment of approximately 28%, with 100% free cash flow conversion once the initial construction phase wraps up.
Financing guardrails and bigger targets
The company committed to limiting external financing for AI projects to $20 billion, split between debt and equity, through fiscal year 2030.
Longer-range targets are larger. Oracle anticipates about 10 GW of total AI capacity by the end of fiscal year 2028, up from the 850 megawatts it reported in the first quarter of FY27.
On cash flow, Oracle expects to turn free cash flow positive in the second half of FY28. It then targets more than $30 billion in free cash flow in FY29. For FY30, it aims for total revenue above $225 billion, a compound annual growth rate of more than 35%.
A backlog built on AI demand
The new figures sit on top of a large backlog: Oracle's total RPO climbed to $664 billion in the first quarter of FY27. Much of the demand traces back to its partnership with OpenAI.
Still, the $20 billion cap addresses investor worries about financing, but it also limits how Oracle can cover cost overruns or slower customer ramps.
Source: Crypto Briefing
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