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Oracle's capex hits $28.5bn in a quarter

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Oracle spent $28.5bn on capital expenditure in the quarter to 31 August and delivered 850 MW of data-centre capacity, while customer prepayments cut its net cash outlay to $18bn.

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IndustryAssessed

Key takeaway

Oracle says most new contracts are prepaid, keeping their hardware cost off its capex until fiscal 2028.

Oracle spent $28.5bn on capital expenditure in the quarter to 31 August, reported on 10 September, and held full-year guidance at $90-95bn⁠¹. Customer prepayments cut its net cash outlay for capex to $18bn, and free cash flow was negative $5.4bn: the company spent more building than its operations brought in. It delivered 850 MW of new data-centre capacity in the quarter⁠².

Oracle's fiscal year runs June to May, the mismatch that inflated hyperscaler capex totals in July. Its remaining performance obligations (revenue contracted but not yet earned, and not cash) reached $664bn, up $26bn on the quarter.

Management says most new contracts are prepaid or bring-your-own-hardware, where the customer funds the chips, so they will not reach Oracle's capex until fiscal 2028 or later⁠³. The smaller compute operators went the other way in August, borrowing about $4.1bn against the processors themselves at Nebius, IREN (a rented-compute operator) and Lambda . Oracle's structure puts part of the cost of new capacity on its customers' balance sheets; theirs puts it on the hardware.

Deep Analysis

In plain English

Oracle spent $28.5 billion in three months building the giant computing facilities behind cloud and AI services, and says it will keep spending at that pace for the rest of the year. But less cash actually left Oracle's accounts than that figure suggests, because customers are increasingly paying Oracle in advance to guarantee themselves capacity. This shows the AI building boom has not slowed down, even in the same weeks that Texas, Loudoun and other places have been pausing new projects. The money keeps moving; some of it is just now coming from customers upfront rather than from Oracle borrowing it itself.

Deep Analysis

Root Causes

Oracle's Remaining Performance Obligations, the contracted-but-unbilled revenue backing its build-out, only convert to cash as customers actually draw on capacity.

Delivering 850 MW this quarter while holding full-year guidance suggests Oracle is racing to bring capacity online fast enough to start billing against that backlog before financing costs on the unbuilt portion compound further.

Sources:Oracle Corporation (SEC filing)·Oracle Corporation (SEC filing)·Mail & Guardian

Mentions:Oracle →Nebius →Lambda →Texas →New York State →

First Reported In

Update #15 · Texas freezes data-centre permits

Oracle Corporation (SEC filing)· 24 Sept 2026

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