Oracle reports Q3 earnings after the bell today, and this isn’t just another quarterly check-in. It’s a verdict on whether the company’s all-in AI infrastructure bet is paying off — or drowning it in debt.
The stakes are enormous. Oracle’s $300 billion partnership with OpenAI last September sent its stock soaring 35% in a single day — the biggest intraday gain since 1992. But since then, reality has set in. The stock has fallen significantly from its peak as investors grapple with the massive capital required to build out data centers at this scale.
In February, Oracle raised $50 billion in financing — including $5 billion in convertible preferred stock and roughly $25 billion in senior notes. The deal was oversubscribed, signaling strong demand. But it also reinforced the uncomfortable truth: of all the hyperscalers racing to build AI infrastructure, Oracle has had to lean the hardest on external financing. Its 5-year credit default swaps widened as bond investors questioned whether the company can maintain its investment-grade rating, currently sitting just two notches above junk.
Then came Friday’s bombshell. Bloomberg reported that Oracle and OpenAI scrapped plans to expand their flagship Stargate data center in Abilene, Texas. Oracle quickly disputed the report, and OpenAI executive Sachin Katti clarified on X that while they considered expanding in Abilene, they’re redirecting that additional capacity to other locations. The Wisconsin site just had its first steel beams go up last week, with over half a dozen sites now under development across multiple states.
Wall Street expects $1.70 earnings per share on $16.92 billion in revenue. But the numbers everyone will be watching are the cloud infrastructure metrics and the remaining performance obligations — Oracle’s backlog of signed but unfulfilled contracts, which has been growing dramatically and reportedly exceeds $500 billion.
The wildcard? TD Cowen reported that Oracle may be evaluating a reduction in workforce of 20,000 to 30,000 employees — a move that could generate $8-10 billion in incremental free cash flow. That’s the kind of brutal efficiency play that would simultaneously terrify workers and excite shareholders.
Here’s the bottom line for traders: Oracle has positioned itself as a legitimate fourth player in AI cloud computing alongside Amazon, Google, and Microsoft. But unlike those three, it doesn’t have an advertising or e-commerce cash machine funding the buildout. Tonight’s report will tell us whether that bold bet is a stroke of genius or a ticking time bomb. Watch the cloud revenue numbers and any commentary on the OpenAI delivery timeline. Those two data points will move this stock more than anything else.