How big of a bet is Oracle willing to make on artificial intelligence? The tech giant just raised its investment plans by $10 billion, bringing total spending to $35 billion in fiscal 2026. That’s like buying a small country’s worth of computer equipment, and Wall Street isn’t sure what to think about it.
Oracle’s massive spending spree focuses on building data centers packed with AI-powered machines. The company plans to construct what it calls the “world’s largest” AI data center. Their Zettascale10 supercomputer will eventually hold 800,000 Nvidia graphics cards by late 2026. To put that in perspective, imagine a warehouse filled with gaming computers but designed for teaching artificial intelligence instead of playing video games.
The strategy seems to be working on paper. Oracle signed a jaw-dropping $300 billion deal with OpenAI to provide computing power starting in 2027. That’s one of the biggest cloud agreements ever recorded. Elon Musk’s xAI company also plans to spend $10 billion on Oracle’s AI servers. Meanwhile, partnership revenue from multicloud arrangements jumped an eye-popping 1,529% in the first quarter. Oracle’s stock price jumped 5.3% following reports of the potential xAI infrastructure deal.
Oracle believes each gigawatt of AI infrastructure could generate $10 billion annually by 2030. The company needs about 10 gigawatts to hit its revenue targets, which would create a $100 billion opportunity. Their AI platform revenue is expected to grow from $2.4 billion in fiscal 2025 to $20 billion soon after.
However, some analysts worry about putting too many eggs in one basket. Oracle’s heavy reliance on OpenAI as a customer creates financial risk if that relationship sours. Building AI infrastructure costs roughly $25 billion per gigawatt, making this venture expensive and uncertain.
Despite concerns, Oracle’s cloud infrastructure sales jumped 77% year-over-year. The company has trained over 8,000 practitioners and developed more than 100 industry-specific AI applications. Oracle’s remaining performance obligations for unfulfilled services reached $455 billion, representing a fourfold increase year-over-year. With total remaining contracts exceeding $500 billion, Oracle appears confident its AI gamble will pay off, even as investors nervously watch from the sidelines.
