In September of last year, during Oracle‘s (NYSE: ORCL) fiscal 2026 first-quarter earnings results, management issued stunning guidance for its cloud infrastructure division. This segment includes the company’s data center business, which essentially rents graphics processing units (GPUs) to companies deploying artificial intelligence solutions.
At the time, Oracle said cloud infrastructure revenue would grow 77% in the current fiscal year to $18 billion and then explode to $144 billion by fiscal year 2030. Investors loved it and bid the stock up in a fervent rally.
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The rally would be short-lived, as AI concerns would affect the entire symbiotic ecosystem. But now, a recent $110 billion catalyst could make Oracle’s fiscal year 2030 guidance more likely.
After the strong September quarter, investors quickly realized that the devil was in the details. At the time, Oracle had also reported $455 billion in remaining performance obligations (RPOs), representing revenue under contract but not yet collected. The high number of RPOs gave the company and investors confidence in Oracle’s guidance.
However, it eventually came to light that $300 billion of those RPOs were from OpenAI, the parent company of ChatGPT, which had struck a five-year deal with Oracle for data center capacity. OpenAI has many outstanding data center commitments, totaling $1.4 trillion over the next eight years.
This made investors concerned because the company — which is, albeit, the fastest-growing consumer app ever — is still only generating about $20 billion in annual recurring revenue. Meanwhile, Oracle was raising significant debt to complete its data center build-out, creating a significant risk if OpenAI is unable to meet its commitments.
In its fiscal 2026 second-quarter earnings report, the company raised its full-year capital expenditure guidance from $35 billion to $50 billion and reported negative free cash flow, which did little to quell investor concerns that it might be taking on too much risk.
The good news for Oracle is that OpenAI recently raised a successful $110 billion private financing round, led by investors including Amazon, Nvidia, and SoftBank, assigning the company a pre-money valuation of $730 billion. While there had been rumblings about this raise, nobody was certain it would get done.
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