Oracle’s shift from traditional database software to AI infrastructure is now backed by the largest contracted revenue backlog in the company’s history.
The company ended its first quarter of fiscal 2027 with $664 billion in remaining performance obligations, up $209 billion from a year earlier and $26 billion from the previous quarter
According to Oracle’s official results, AI cloud demand drove this latest increase. Oracle said it signed more than $30 billion in additional AI cloud contracts during the three months ended August 31, while demand for AI training and inference services continued to grow faster than available capacity. And the company still expects about half of its total backlog to become revenue within the next 36 months.
What the $664 Billion Backlog Includes
The $664 billion covers Oracle’s total remaining performance obligations. While Oracle has not disclosed the exact amount tied to AI infrastructure or identified each customer’s share, it has said most of the backlog growth in the third and fourth quarters came from large AI contracts.
The prepaid and customer-supplied hardware portions of those contracts totalled $75 billion at the end of fiscal 2026. AI is therefore driving much of the growth, while $664 billion remains Oracle’s company-wide RPO.
AI Infrastructure Is Now Oracle’s Main Growth Engine
Oracle’s quarterly revenue rose 30% to a record $19.3 billion. Specifically, cloud revenue increased 62% to $11.6 billion, led by Oracle Cloud Infrastructure, where sales jumped 121% to $7.4 billion.
The difference across the business is clear, as cloud application revenue grew 10% to $4.2 billion, while software revenue fell 3% to $5.5 billion as customers continued moving from software installed on their own systems to cloud services.
Oracle also delivered 850 megawatts of additional data centre capacity during the quarter. According to the company’s latest SEC filing, since the end of its previous quarter, the company has supplied more than 300,000 GPUs to AI cloud customers, nearly three times the capacity delivered in the preceding three months.
The Backlog Comes With a Large Construction Bill
Turning those contracts into revenue requires data centres, chips, electricity, and other infrastructure. While Oracle spent $28.5 billion on capital projects during the quarter, compared with $8.5 billion a year earlier, its free cash flow remained negative at $5.4 billion, even though the outflow was smaller than analysts expected.
However, customer funding reduced some of the pressure. About $11.36 billion of Oracle’s quarterly capital spending was covered by customer prepayments. Chief Financial Officer Hilary Maxson also said most of the new orders used prepayments, customer-owned hardware, or similar arrangements, meaning they did not require Oracle to increase its capital plans.
Oracle still expects to spend between $90 billion and $95 billion on capital projects in fiscal 2027, as it also completed a $20 billion stock sale during the quarter to support its wider investment programme.
What the $664 Billion Backlog Means
The results, so far, show that Oracle has secured long-term demand as AI developers and businesses increasingly compete for computing capacity. They also show that the company’s future growth increasingly depends on how quickly it can build and operate the infrastructure promised in those contracts.
Oracle now expects at least $90 billion in revenue for fiscal 2027 and adjusted earnings of $8.10 per share, especially as the $664 billion backlog gives the company an unusually clear view of future sales.
However, its success will depend on converting those commitments into reliable and profitable cloud services without allowing infrastructure costs to grow faster than the cash the business produces.
