When Oracle reports its fiscal first-quarter results on September 10, the headline numbers will matter—but for many investors, the real story is how the company plans to pay for its ambitious artificial intelligence infrastructure push. RBC Capital Markets, an investment bank, estimates that Oracle's net cash capital spending could reach roughly $70 billion by fiscal 2027, with the bulk going toward AI data centers. The question isn't just whether demand is there; it's whether the funding plan holds up.
The scale of the spending
Oracle has been aggressively expanding its cloud and AI capacity to compete with hyperscalers like Amazon, Microsoft, and Google. That requires enormous upfront investment in data centers, chips, and networking gear. RBC's estimate of about $70 billion in net capital expenditures over the next few years reflects that ambition. Net capex is the cash a company spends on property, equipment, and other long-term assets, minus any proceeds from selling old assets. It's a key measure because it shows how much cash is actually leaving the business to fund growth.
According to RBC, about $40 billion of that spending would be financed through new debt and equity. That means Oracle would be borrowing money or issuing shares to cover a significant portion of its buildout. The rest would come from operations and, importantly, from customer prepayments.
Customer cash as a funding source
RBC expects Oracle to collect roughly $75 billion in cumulative "build-your-own" prepayments from customers by fiscal 2027. These are contracts where customers pay upfront for reserved cloud capacity, often as part of long-term deals. For Oracle, that cash arrives early, helping to offset the heavy spending. It's a model that has become more common among AI infrastructure providers, as customers lock in capacity ahead of time.
This approach reduces the need for external financing, but it also creates a dependency: if customers delay or cancel prepayments, the funding picture could shift. That's why RBC says the spending plan matters as much as the demand story. Investors will be listening for any updates on the pace of prepayments and the company's ability to convert them into revenue.
What it means for investors
For everyday investors, the key takeaway is that Oracle's AI bet is a high-stakes, capital-intensive play. The company is essentially betting that the surge in demand for AI computing will continue for years, justifying the massive outlay. If that bet pays off, the prepayments and long-term contracts could provide a steady revenue stream. If demand cools or competition intensifies, the debt and equity dilution could weigh on returns.
Oracle's stock has been a favorite among AI-focused investors, but the funding plan adds a layer of risk. Higher debt levels can increase interest costs and reduce financial flexibility. Issuing new equity can dilute existing shareholders' stakes. Investors should watch how Oracle balances these trade-offs in its earnings call.
This is part of a broader trend in the AI sector, where companies are raising large sums to fund infrastructure. For example, zero-coupon convertibles have become a popular funding tool for AI firms, allowing them to raise capital without immediate interest payments. Oracle's approach—using a mix of debt, equity, and customer prepayments—is one of several strategies companies are using to finance the AI buildout.
What to watch on September 10
When Oracle reports, investors will be looking for several things: the growth rate of its cloud and AI revenue, the pace of new prepaid contracts, and any guidance on future capital spending. RBC's estimates are just one view, but they highlight the scale of the challenge. If Oracle signals that spending will be higher or lower than expected, the stock could move.
It's also worth noting that Oracle's fiscal year ends in May, so the September report covers the first quarter of its fiscal 2026. That means the company may provide updated full-year guidance, which could include revised capex plans. Investors should compare any new numbers to RBC's projections.
The bigger picture
Oracle's situation is not unique. Many tech companies are pouring billions into AI infrastructure, and the question of how to fund it is becoming central to their valuations. Grid buildouts for data centers and government funding pushes are also part of the ecosystem. For investors, understanding the funding mechanics is as important as the technology itself.
In the end, Oracle's earnings report will offer a window into whether the AI boom is translating into sustainable cash flows. The company's ability to fund its buildout without over-leveraging will be a key test. As always, past performance isn't a guarantee of future results, but the funding plan is a clear signal of management's confidence—and its risk appetite.
