By Oracle (ORCL) stock rose about 4% at midday on Thursday as investors responded to positive news flow around OpenAI, highlighting the growing importance of the AI company to Oracle’s outlook.
Oracle’s relationship with OpenAI has become a major part of its AI infrastructure strategy.
The companies agreed to a $300 billion computing deal last September, helping position Oracle as a major hyperscaler.
However, the scale of the commitment has also raised concerns about Oracle’s spending, debt and exposure to a single customer.
OpenAI funding puts Oracle in focus
Oracle’s stock has increasingly reacted to developments surrounding OpenAI.
Recent reports that OpenAI could delay its initial public offering from 2026 to at least 2027 weighed on sentiment.
However, reports that OpenAI has been in talks to raise capital at a valuation of $1.2 trillion provided a more positive development for Oracle.
If the reported fundraising goes ahead, it could help address concerns about OpenAI’s ability to fund its expansion and, in turn, support Oracle’s plans to build AI infrastructure for the company.
Oracle agreed to provide $300 billion of computing capacity to OpenAI, making the AI company a significant part of its future infrastructure demand.
The relationship has also contributed to concerns in Oracle’s debt market.
Higher credit default swap spreads have reflected investor concerns about the cost and risks associated with Oracle’s debt as the company invests heavily in AI infrastructure.
Oracle’s $664B RPO highlights AI demand
Oracle reported remaining performance obligations of roughly $664 billion at the end of its latest fiscal quarter.
RPO represents contracted services and products that have not yet been delivered or recognised as revenue.
The size of the backlog is significant compared with Oracle’s trailing-12-month sales of approximately $71.8 billion.
The RPO is equivalent to roughly 9.2 times the company’s sales over the previous four quarters.
However, the backlog also carries customer concentration risk. Around $300 billion of Oracle’s RPO is linked to OpenAI.
If OpenAI were to experience weaker demand or slow its expansion plans, it could potentially reduce or delay its contracted spending with Oracle.
That would affect the pace at which Oracle converts its backlog into revenue.
At the same time, the scale of Oracle’s RPO points to significant potential demand for its AI cloud infrastructure services.
Oracle expects revenue to grow about 34% this year and earnings to increase roughly 19%, despite the costs involved in expanding its cloud infrastructure business.
The stock is trading at approximately 17 times this year’s expected earnings, according to the provided text.
Oracle cuts jobs amid AI infrastructure spending
Oracle is also reducing its workforce as it manages operating costs while increasing spending on AI infrastructure.
The company is laying off 359 Seattle-based employees, including programme managers, software developers and engineers, according to a Worker Adjustment and Retraining Notification filing reported by the Business Journal.
The latest cuts follow 491 job reductions in Seattle earlier in the year. The reported layoffs have affected at least 850 employees in the city during 2026.
Oracle notified employees about the latest cuts on Monday.
The company reportedly cut employees across two Seattle locations, including the JPMorganChase Center.
The layoffs come as Oracle continues to invest heavily in AI infrastructure while managing the associated spending and debt.
The company’s relationship with OpenAI therefore remains central to the outlook for that investment, with the reported fundraising discussions potentially providing additional context for Oracle’s large contracted commitments.
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