Oracle Reports Record AI Backlog Amid Project Jupiter Risks

Oracle Corporation reported fiscal first-quarter revenue of $19.3 billion and a record revenue backlog of $664 billion, fueled by over $30 billion in new AI cloud contracts. While cloud infrastructure grew by 121%, the company reported negative free cash flow of $5.4 billion. To support projected annual capital expenditures of $90 billion to $95 billion for fiscal 2027, Oracle completed a $20 billion common-stock sale and intends to raise another $40 billion through debt and equity.

Financial stability is currently pressured by Project Jupiter, a New Mexico data center linked to an agreement with OpenAI. Loans for the project have traded below par at 89 to 91 cents on the dollar as investors weigh Oracle's credit profile. Oracle issued a force majeure notice to the project developer following pipeline delays and regulatory setbacks, though the company asserts the project remains on schedule.

Analysts have downgraded Oracle's stock to a sell, citing a heavy dependency on the OpenAI ecosystem, which accounts for nearly half of the company's remaining performance obligations. Concerns persist that rising component costs and regulatory hurdles may hinder revenue conversion and necessitate further spending increases for the coming fiscal year.