Oracle Secures $300B OpenAI Deal, Boosting Cloud Backlog

Oracle (ORCL, Financials) reported a sharp increase in remaining performance obligations after signing a $300 billion, five-year cloud partnership with OpenAI. The deal allows OpenAI to run Oracle databases and GPU compute through the Azure-OCI interconnect and Database Azure framework, integrating Oracle's infrastructure with Microsoft's cloud.

The company said RPO jumped 359% from a year earlier to $455 billion, reflecting $317 billion added from the OpenAI agreement. Oracle expects accelerating cloud revenue, led by its Oracle Cloud Infrastructure segment.

To meet demand, Oracle raised $18 billion in September and is reportedly in talks for an additional $38 billion to fund construction of large-scale data centers in Texas and Wisconsin. The company's fiscal 2026 capital expenditure guidance increased 91% to $35 billion.

Operating cash flow over the past four quarters rose 13% year over year to $21.5 billion, but free cash flow remained negative at $5.9 billion due to elevated investment. Shares are down about 14% since early 2025, trading near pre-first-quarter levels.