Oracle used its latest annual report to spell out a risk rarely stated this plainly: its massive data center expansion may not earn back the money spent if major customers fail to pay or choose not to renew. For a company pouring capital into AI infrastructure, that disclosure stood out.
The filing shows Oracle's capital expenditures for fiscal 2026 reached $55.7 billion, up from $21.2 billion a year earlier. The company said it plans to spend another $90 billion to $95 billion in fiscal 2027. Most of that money is going into data centers built to serve computing demand from customers including OpenAI. Oracle also acknowledged that the investment may not be recovered.
Oracle laid out how the data center push could go wrong
In the filing, Oracle warned that construction costs could run over budget and projects could be delayed because of supply chain problems, government restrictions on data center development, or failures by third-party contractors to complete work on time. Those are direct risks to projects that already require unusually large upfront spending.
The company said the situation could become more difficult after the facilities are finished. Major customers may fail to pay or may not renew agreements, leaving Oracle with expensive assets that might not be re-leased, repurposed, or transferred on acceptable terms. If that happens, the capacity built for large clients could turn into long-duration fixed assets with limited near-term recovery.
OpenAI was not named, but the market linked the warning to Stargate
Oracle did not explicitly mention OpenAI in the risk language, but the report said the market has treated the reference as obvious. Under the Stargate agreement, Oracle is building large data centers across the US and supplying compute to OpenAI through OCI.
That contract is described as worth $300 billion, the largest single order in Oracle's history and the biggest slice of $850 billion in unstarted data center lease commitments tied to six major companies. Oracle wrote in its filing that some customers may be highly leveraged and exposed to their own operating and regulatory risks, and that non-payment and non-performance can still occur even if its credit review and analysis functions operate as intended.
Questions had already surfaced in the market around Stargate, with reports that disagreements among the three parties over control of data centers had at one point slowed expansion plans.
Debt pressure and a June stock slide deepened investor concern
Wall Street's unease over AI returns has shown up in share prices. The report said Oracle, Microsoft, Meta and three other companies have collectively committed $850 billion to data center leases that have not yet broken ground, and all six stocks fell in June. Oracle posted the steepest decline, dropping more than 40% during the month.
Moody's also warned that Oracle's debt has been growing faster than earnings, with leverage nearing 4 times EBITDA. Unlike Microsoft and Meta, which are largely funding data center construction with internal cash flow, Oracle is described as the only one among the six making a large debt-funded AI infrastructure push. It now carries more than $100 billion in debt, while free cash flow has turned negative.
Oracle said in the filing that it must keep adding computing capacity to grow OCI, and that doing so requires substantial capital and operating spending. The company has now stated the risk in plain terms, while keeping the build-out in motion.