Analysts from BNP Paribas indicated in a Friday report that Oracle (NYSE: ORCL) might further increase its capital expenditure guidance in its upcoming financial results, drawing market attention to the cloud infrastructure giant's continued heavy investment in AI.
According to the BNP Paribas analysis, Oracle's management is likely to provide a higher capital expenditure forecast in its fiscal fourth-quarter report. The company has already raised its fiscal 2026 capital expenditure guidance to approximately $50 billion, doubling the initial plan of $25 billion and far exceeding the roughly $21 billion level for fiscal 2025. This aggressive investment is primarily directed towards GPU infrastructure and new data center construction to meet the surging demand for cloud computing power from AI leaders like Nvidia, Meta, and OpenAI.
Oracle's confidence in continuing this aggressive investment stems from its record-breaking order backlog. By the end of the third fiscal quarter, the company's remaining performance obligations had surged to $553 billion, an increase of over four times compared to the same period last year. In just one quarter, it added $68 billion in new contractual commitments, largely from multi-billion-dollar deals with clients such as Meta and Nvidia. Oracle executives have previously stated that most of these orders can be quickly converted into revenue as the necessary capacity is either ready or under construction.
However, this aggressive capital spending is placing significant pressure on Oracle's cash flow. Data shows that as quarterly capital expenditure has skyrocketed from less than $8 billion three years ago to $48.3 billion in the third fiscal quarter of 2026, the company's free cash flow has turned negative, shifting from a positive $11.3 billion to a negative $24.7 billion. To bridge this funding gap, Oracle announced plans in January 2026 to raise $45 to $50 billion through bond and stock issuances, which would be one of the largest financing activities in the company's history.
Market opinions are divided on the sustainability of Oracle's high-investment model. Since hitting an all-time high in September 2025, the company's stock price has been halved, erasing approximately $460 billion in market value. The analysis from BNP Paribas introduces a new variable into this debate, and investors will be closely monitoring Oracle's forthcoming earnings report and management's commentary on future capital expenditure plans.
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