Larry Ellison has committed Oracle to one of the largest infrastructure bets in tech history, announcing a $50 billion capital raise to build AI-driven cloud capabilities—even as the company’s stock has plummeted 59% from its peak last September amid investor concerns over mounting debt and negative free cash flow.
Oracle’s fiscal 2026 capital expenditures reached $55.7 billion, a 162% increase year-over-year, as Ellison doubled down on data center construction for OpenAI and other AI customers. The company’s free cash flow swung to negative $23.7 billion in the fiscal year ending May 2026, a stark reversal that underscores the financial strain of the infrastructure push.
The scale of Oracle’s commitment to AI is extraordinary. In 2025, Ellison signed a $300 billion cloud deal with OpenAI, positioning Oracle as the foundational infrastructure provider for one of the world’s most influential AI companies. Oracle is also part of the $500 billion Stargate project, announced in July 2026, a joint venture with OpenAI and SoftBank to build U.S. AI infrastructure over the next five years.
The Financial Toll
The AI infrastructure buildout has forced Oracle to take on significant debt to fund operations. The company carries roughly $117 billion in corporate debt and has accumulated approximately $260 billion in data center lease obligations, leaving its credit rating just one notch above junk status, according to a Reuters report from August 4, 2026.
To manage costs, Oracle cut 21,000 employees—13% of its workforce—in 2026 and was planning additional layoffs in August as it sought to balance its massive infrastructure investment with profitability concerns. The moves reflect a pattern seen across Big Tech: according to Goldman Sachs analysis from July 28, 2026, the industry’s major AI investors are expected to reach $750 billion in combined capex by year-end 2026, with more than a third of that funded through debt.
Ellison’s strategy mirrors the approach of other tech leaders betting heavily on AI infrastructure. When Microsoft announced its major OpenAI partnership and subsequent capex surge in 2023, its stock initially fell before recovering as the company demonstrated that AI investments could drive long-term revenue growth. However, Oracle faces a steeper challenge: the company is spending more than it generates, a dynamic that has rattled Wall Street.
A New York Times investigation published on July 31, 2026, detailed how Ellison’s AI bet has left Oracle dependent on OpenAI’s success and burdened by debt. The article noted that the company agreed to take on much of the financial burden of building out the data centers that OpenAI will use for training its AI models—a risk-heavy arrangement that transfers execution risk to Oracle’s balance sheet.
Despite the stock volatility and debt concerns, Ellison has expressed confidence in the long-term payoff. In March 2026 earnings calls, he dismissed investor fears, arguing that demand for AI infrastructure is “astronomical” and that Oracle’s backlog—which reached $553 billion by May 2026—demonstrates future revenue potential. Analysts remain divided: some see Oracle as positioned to capture a critical share of AI infrastructure spending, while others worry the company is overextended.
Sources
- Bloomberg — Oracle’s fiscal 2026 capex and free cash flow figures
- CNBC — Oracle’s $300 billion OpenAI deal and Stargate project details
- Reuters — Oracle’s debt load and credit rating status
- The New York Times — Investigation into Ellison’s AI infrastructure bet and financial burden
- Goldman Sachs — Industry capex projections and debt funding analysis
- Yahoo Finance / Benzinga — Oracle stock performance and layoff announcements
