Oracle Earnings Preview: $100 Billion Debt Looms as "Stargate" Project Faces Scrutiny

Oracle (ORCL), a major operator of AI data centers, is set to report its third-quarter earnings after the closing bell on Tuesday. The results are expected to serve as a critical barometer for AI investment sentiment across the broader market.

 

The report comes amid swirling controversy over the "Stargate" data center project in Texas. Earlier reports suggested that Oracle and OpenAI had scrapped plans to expand the facility and were preparing thousands of job cuts, with Meta reportedly in talks with developer Crusoe to lease the site. The news significantly dampened market enthusiasm for the ambitious project and cast a shadow over Oracle's strategic roadmap.

 

Oracle subsequently moved to debunk these claims, asserting that it remains on track with Crusoe to build one of the world's largest data centers in Texas. The company stated that two buildings are already fully operational and the rest of the campus is progressing as scheduled. Furthermore, Oracle confirmed it has completed 4.5GW of leasing and is fulfilling its commitments to OpenAI.

 

Despite the rebuttal, investor anxiety remains palpable. Oracle shares fell to $151.56 on Monday, marking a year-to-date decline of over 22% and a staggering 54% drop from its all-time high reached last September.

Earnings Expectations & CapEx Surge

Oracle’s aggressive capital expenditure (CapEx) over the past year has ignited widespread debate. In the first fiscal quarter ended August 31, CapEx hit $8.5 billion, a 269% year-over-year surge. For the six months ended November 30, spending reached $205 billion, up 227%.

 

Analysts project that Q3 CapEx will grow another 139% to reach $14 billion.

 

The primary concern for investors is Oracle’s financing model. Unlike Google, Amazon, and Microsoft, which fund expansion through massive internal cash flows, Oracle is the only hyperscaler relying heavily on debt to fuel its data center build-out. The company’s total debt has ballooned to $100 billion and continues to climb.

 

Key Financial Estimates (Q3 FY2026):

• Adjusted EPS: Estimated at $1.70 (vs. $1.47 YoY)

• Revenue: Projected at $16.9 billion (vs. $14.1 billion YoY)

• Cloud Revenue: Expected to contribute $8.8 billion

• Software Services: Forecast at $5.9 billion

• Remaining Performance Obligations (RPO): Expected to exceed $470.7 billion, a massive jump from $130 billion in the same period last fiscal year.

While Oracle’s top and bottom lines show positive growth, the street will be laser-focused on how the company manages its massive CapEx cycle amidst negative free cash flow and whether its financing channels can sustain the current pace of expansion.