Oracle reported record remaining performance obligations of $664 billion for the first fiscal quarter of 2027, ending August 31, 2026. This backlog represents a 46% increase year-over-year, driven largely by over $30 billion in new AI cloud contracts. Half of this total backlog is currently tied to OpenAI.
Cloud infrastructure revenue rose 121% to $7.4 billion for the quarter. The company deployed more than 300,000 GPUs with approximately 98% utilization and delivered 850 megawatts of AI capacity. Oracle expects 13% of the backlog to convert to revenue within a year, with nearly half expected over three years.
Capital expenditures for the quarter reached $28 billion to $28.5 billion, resulting in a negative free cash flow of $5.4 billion. Oracle projects fiscal 2027 and 2028 as peak spending years, with estimated gross capital expenditures of $90 billion to $95 billion for fiscal 2027.
Operational challenges include power and permitting delays, specifically affecting projects in New Mexico and Wisconsin. Additionally, investor Michael Burry has expressed concerns regarding customer-financing arrangements within some of the company's contracts, which may impact future revenue quality.
