Oracle's cloud backlog hits $664 billion, and the company is burning cash to build it

A quarterly filing shows the promise of future AI revenue growing much faster than the cash on hand to build the data centres behind it.

10 September 2026 · 6 min read

What happened

Oracle told investors on 10 September that its remaining performance obligations, the total value of contracts customers have signed but not yet paid for, reached $664 billion at the end of its first fiscal quarter, up $209 billion from a year earlier. Oracle's own filing with the US securities regulator ties the growth mainly to long-term cloud computing contracts, several of them from AI companies buying computing capacity years in advance.

Why it matters

RPO is not cash. It is a promise, and building the data centres to honour that promise costs money now. Oracle's filing shows it spent $28.5 billion on capital equipment in the quarter, more than the $19.3 billion of revenue it actually brought in over the same three months. Free cash flow, the cash left over after running the business and building for the future, was negative $5.4 billion, worse than negative $362 million a year earlier and, according to Yahoo Finance's reporting on the filing, the sixth consecutive quarter Oracle's free cash flow has been negative. Put plainly, Oracle spent more building data centres this quarter than it earned from everything else the company does, and it has done that for six quarters running.

Oracle is not the only company shaped like this right now. One day earlier, Broadcom filed its own quarterly report showing $179.2 billion of similarly structured customer commitments, about a quarter of it expected to become revenue within a year. Oracle itself, in a statement reported by Yahoo Finance, said there is "no incremental impact on its plans to raise capital" from how these new AI contracts are structured, which reads as the company expecting to keep raising money to cover the gap rather than closing it by spending less. Citi's analysts, quoted in the same report, called it a quarter that "checked nearly every box," a reminder that Wall Street's read on this is not alarmed, at least for now.

What would change it, and when

What would close the gap between spending and cash coming in is Oracle's own contracts turning into revenue. The company booked more than $30 billion of new AI cloud contracts this quarter alone, and its cloud infrastructure business grew 121 percent to $7.4 billion. Oracle told investors it expects at least $90 billion in total revenue for the full fiscal year, more than it collected in the quarter just reported. If that growth holds and the capacity gets built and used at the prices Oracle is counting on, the backlog converts into real revenue over the next several years and the cash flow picture improves on its own. If demand for AI computing slows, or customers renegotiate, a $664 billion promise is worth only as much as the contracts behind it.

What we do not know

Oracle's filing does not break down which customers make up the $664 billion, so it is not possible to say from what we read how concentrated that figure is among a handful of AI labs versus spread across many buyers. We also did not find, in anything Oracle itself has published that we could read directly, a fresh figure for total capital spending guidance for the rest of the fiscal year; Yahoo Finance's reporting on the filing references "up to $95 billion" as a forecast Oracle gave in June and is described as maintaining. And no document we read says how much of the $664 billion in contracts carries a penalty if a customer cancels, which would matter enormously if AI demand ever slows.

What this changes for you

If you hold Oracle stock or bonds, or work somewhere that lends to companies like it, this quarter is the plainest evidence yet that Oracle's own AI buildout is being financed by borrowing and customer prepayment rather than by cash already in hand, and Broadcom's similarly shaped backlog, filed a day earlier, suggests Oracle is not alone in that pattern. If none of that touches you directly, the immediate effect is still small. But Oracle and companies like it are the businesses actually building the data centres that determine how much AI computing costs and how available it is, and how they finance that build shapes how expensive a slowdown would be if the bet does not pay off.

Sources

Everything above is written from these. Each line says what that document proves.

1. sec.gov: Oracle's own 8-K exhibit: RPO $664bn up $209bn year over year, Q1 capex $28.499bn, total revenue $19.3bn up 30%, OCI revenue $7.4bn up 121%, FY27 revenue guidance of at least $90bn.
2. financefeeds.com: Independent analysis of the filing: free cash flow negative $5.4bn versus negative $362M a year earlier, and Oracle's debt load in the $125bn to $130bn range.
3. finance.yahoo.com: Independent reporting on the earnings call: more than $30bn of new AI cloud contracts booked this quarter, Oracle's own statement that its capital-raising plans are unaffected, the sixth consecutive negative free-cash-flow quarter, and Citi's on-record analyst reaction.