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Oracle to investors: Don’t worry about data center spending, company is ‘very, very good’ at cost-cutting

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Oracle has two magic words for investors concerned with the company’s aggressive data center spending: fast and cheap.

Shares of the cloud giant rose as much as 10% on Tuesday after it surpassed investor expectations for the third quarter and raised revenue guidance to $67 billion for fiscal 2026.

Still, Oracle faced some questions about its AI data center buildout and how it plans to justify the billions of dollars it burns along the way. In February, Oracle announced a $50 billion debt raise to help fund its AI ambitions. In the last year, the company has announced major data center projects in Texas, New Mexico, and Michigan.

On Oracle’s third-quarter earnings call Tuesday, Bernstein analyst Mark Moerdler asked, “How comfortable are you with the values you’re creating from the AI data center business itself?”

Oracle co-CEO Clay Magouyrk reassured Moerdler that the company is focused on minimizing the cost of its data center buildout to maximize future profitability.

“We continue to get better and better at running these data centers, delivering them more cheaply, optimizing the amount of cost for networking and hardware spend, as well as power,” said Magouyrk.

He added that Oracle is focused on accelerating the time its buildings spend under construction.

“We’re very good at it,” he said.

“We’re very, very good at reducing those costs during that time period.”

He did not give any other details on how exactly Oracle manages its data center budget.

In 2022, Oracle undertook significant cost-cutting measures, laying off thousands of people in the wake of its $28 billion acquisition of medical records giant Cerner.

In January, Business Insider reported that Oracle was struggling to find financing for Stargate, its $500 billion data center initiative with OpenAI.

Lenders and investors told Business Insider they were growing weary of the project’s lofty ambitions as it races to keep up with the rest of Big Tech amid the AI race.

Amazon, Microsoft, Google, and Meta are on track to spend $600 billion on data centers and AI infrastructure in 2026 alone.




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Oracle investors have questions about its spending

by with No Comment Xpandfy

Oracle investors have questions about its spending.

The software giant posted quarterly results that fell short of Wall Street’s revenue expectations on Wednesday, and shares slid more than 11% in after-hours trading.

“Capex & financing needs have been the biggest investor question over the last two months, weighing on the stock,” wrote Derrick Wood, an analyst at TD Cowen, ahead of the earnings call.

During the call with investors on Wednesday, Clay Magouyrk, co-CEO of Oracle, reassured analysts that the company’s debt remains in “investment-grade” and that the company is in unique business areas that justify the optimism.

“We’ve been reading a lot of analyst reports, and we’ve read quite a few that show an expectation of upward of a $100 billion for Oracle to go out and kind of complete these build-outs,” said Magouyrk.”And based on what we see right now, we expect we will need less, if not substantially less, money raised than that amount to go and fund this build out.”

Toward the end of the call, an analyst with Guggenheim Securities asked why Oracle is so optimistic that its growth will accelerate when most software service companies are seeing slowing growth, and Magouyrk responded that Oracle is the “only applications company in the world that’s selling complete application suites,” with added AI.

Despite the revenue miss, Oracle still saw 14% year-over-year revenue growth in the quarter ending November 30. Earnings per share also beat estimates at $2.26 versus the expected $1.64. Net income jumped to $6.14 billion, up sharply from $3.15 billion a year earlier.

The results drop as Oracle leans heavily into the AI frenzy, betting big on massive data center expansion to win more business.

In its September earnings report, Oracle stunned Wall Street with a surge in cloud bookings tied to AI workloads, a boom that sent the stock to a record high. But the rally didn’t last. Shares have since tumbled roughly a third as investors grow skittish about the enormous capital required to keep building data centers and whether Oracle’s biggest customer, OpenAI, can actually deliver on the multibillion-dollar cloud commitments it’s making.




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