Oracle's shares jumped after the company reported a 30% rise in quarterly revenue, driven by faster growth in its data centre business as it delivers capacity for AI contracts including its $300bn deal with OpenAI. The results come alongside heavy capital spending, a negative free cash flow quarter, and a credit downgrade tied to Oracle's reliance on a small number of customers.
Oracle shares climbed about 6% in after-market trading after the company reported total revenue rose 30% to $19.3bn for the three months to the end of August, compared with the year before. The gain suggests Oracle is making progress on its costly shift from business software into AI infrastructure.
Data centre unit drives the growth
The infrastructure unit posted revenues of $7.4bn last quarter, and Oracle said year-on-year growth in its wider cloud business would accelerate to between 64% and 70%, beating analysts' estimates. Co-chief executive Clay Magouyrk said the group brought 850 megawatts of data centre capacity online in the quarter and had delivered six of eight buildings for OpenAI at its 800MW Abilene campus in Texas.
It also signed $30bn worth of new contracts to supply data centre capacity in the quarter, taking its pipeline to $664bn.
Spending climbs as cash flow turns negative
Building that capacity has come at a cost. Capital expenditures came in at $28.5bn, up from $8.5bn a year before, though the figure included $11.4bn from customers who had pre-paid for chips. Even so, spending still exceeded Oracle's revenue for the second quarter in the past year, and net income was $4.7bn.
Oracle previously said it would invest $70bn in the coming fiscal year to finance construction, up from $55.7bn in the year ended May 31. The company said free cash flow for the first quarter was negative $5bn, and it has completed a $20bn share sale as part of a $50bn package of measures, including a bond offering, to help finance the buildout.
Credit downgrade and investor doubts persist
S&P downgraded Oracle's credit rating in July to one notch above junk status, citing its reliance on a few customers and an uncertain path to profitability in its AI data centre business. Oracle's shares have fallen by nearly half since the record level it hit after announcing the OpenAI deal in September 2025.
According to Goldman Sachs analyst Gabriela Borges: "We have plenty of clients that tell us that [Oracle] is too spicy for them." Borges said the company had not provided sufficient visibility into the contractual terms of its relationship with OpenAI, and needed to significantly increase cash flow to finance future sites.
Oracle has also faced setbacks with multiple large data centre projects due to permitting delays and local opposition, and has undergone significant layoffs to free up cash for AI investments.
Source: Financial Times
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