Microsoft and Oracle Face Rising Capital Expenditures Amid Growing AI Backlogs
Microsoft and Oracle are experiencing massive surges in contract backlogs as demand for AI infrastructure continues to outpace supply. Microsoft reported a 73% jump in commercial remaining performance obligations to $677 billion, while Azure growth exceeded Wall Street expectations at 48%. To meet this demand, Microsoft is significantly increasing capital expenditures, with CFO Amy Hood projecting quarterly CapEx to exceed $50 billion. Oracle is seeing similar trends, reporting a massive increase in remaining performance obligations to $664 billion and more than doubling its cloud infrastructure revenue. However, the cost of scaling is substantial; Oracle has filed to raise billions through debt and equity and is utilizing special purpose vehicles with Apollo and Blackstone to manage balance sheet exposure. Goldman Sachs estimates that the five largest U.S. hyperscalers will increase AI infrastructure spending to $1.2 trillion by 2027.
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Topics: AI Infrastructure Spending Capital Expenditures Cloud Computing Revenue Data Center Expansion
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Part of the story Microsoft and Oracle Face Rising Capital Expenditures Amid Growing AI Backlogs (2 articles)