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Oracle has figured out a neat trick for building one of the largest data center networks on the planet: get the customers to pay for it upfront. In its fiscal first quarter ending August 31, 2026, the company collected $11.36 billion in customer prepayments, a sum that covered a significant chunk of its $28.5 billion in capital expenditures for the period.
The arrangement is working. Cloud infrastructure revenue more than doubled year-over-year, climbing 121% to $7.4 billion. Total cloud revenue hit $11.6 billion, a 62% increase. And the pipeline keeps growing, with Oracle booking over $30 billion in new AI cloud contracts during the quarter alone.
The prepay playbook
Oracle’s remaining performance obligations, essentially its backlog of contracted future revenue, surged to $664 billion. That figure represents an extraordinary runway of committed spending from customers who have already signed on the dotted line.
The company delivered 850 megawatts of new data center capacity during the quarter and supplied more than 300,000 GPUs to AI clients. Its GPU utilization rate hit 97.9%, meaning almost every chip Oracle has deployed is actively running workloads.
Who’s writing the checks
The client roster reads like a who’s who of the AI arms race. OpenAI, xAI, and Meta are all tapping Oracle for cloud infrastructure. The OpenAI relationship is particularly notable, tied to the Stargate project with a reported multi-year commitment exceeding $300 billion.
Oracle’s overall capital expenditures reached $55.7 billion in fiscal 2026, and the company has outlined plans for $90 to $95 billion in gross capex for fiscal 2027. After accounting for customer contributions, the net figure comes in around $70 billion.
The free cash flow question
There is a catch, and it is not a small one. Oracle reported negative free cash flow of $5.4 billion in the quarter. Prepayments help with liquidity, but they do not eliminate the fundamental math of spending far more on infrastructure than the business currently generates in profit.
Investors seem willing to accept that tradeoff. Oracle’s stock rose following the earnings release, reflecting confidence in the company’s ability to turn contractual commitments into sustained financial performance.
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