Oracle’s Data Centre Strategy: Cloud, AI and More Capacity

Oracle’s position at number 16 on the Data Centre Magazine Top 100 list follows a period of transformation for the company. The enterprise software business was a late entrant to the cloud computing market, with Chairman and Chief Technology Officer Larry Ellison once describing the concept as "gibberish".

The company has since altered its strategy, committing to a capital expenditure plan to expand its global data centre footprint. This investment is a response to demand for its cloud infrastructure and AI services.

Oracle’s approach involved designing its second-generation cloud infrastructure to address enterprise requirements for security, performance and cost management. This strategy is now affecting the company’s financial results and its standing in the data centre sector.

An architecture for enterprise and AI

Oracle Cloud Infrastructure (OCI) was engineered for the workloads of the company’s database customers. The architecture offers bare-metal instances that provide hardware access without a hypervisor, a feature for businesses that require high-performance compute capabilities. Security was a design principle of the Gen 2 Cloud Infrastructure, providing customer isolation and threat detection for regulated industries. This focus on enterprise-grade functions has been a differentiator.

Former CEO and now-Executive Vice Chair Safra Catz said: “We know better than anyone what it takes to run the full stack of technology that goes into mission-critical workloads.”

This architecture is also suited for AI workloads. OCI provides bare-metal GPU instances with Nvidia’s Blackwell architecture and AMD’s MI300X GPUs. Its RDMA over Converged Ethernet cluster networking provides low latency for communication between GPUs during the training of large language models. This capability received validation through a multi-year deal with OpenAI. The AI company signed an agreement with Oracle to secure computing infrastructure for its initiatives.The demand for AI-grade compute has led AI labs to adopt a multicloud strategy for training needs.

A global construction programme

Oracle is backing its strategy with significant investment in physical infrastructure. The company’s capital expenditures were about US$6.9bn in 2024 and surged to approximately US$21.2bn in 2025. Furthermore, Oracle has plans to increase capital expenditures sharply in 2026, with projections around US$35bn to support its expanding cloud and AI infrastructure. Projections for fiscal year 2026 show a capital investment of nearly US$35bn, with the funds directed to data centre equipment.

Chairman and Chief Technology Officer Larry Ellison said: “We're bringing on enormous amounts of capacity over the next 24 months,” noting one new AI facility in the United States is sized to fit eight Boeing 747s nose-to-tail.

The construction is global. The company announced plans to invest over $8 billion in Japan, more than US$6.5bn in Malaysia and US$3bn across facilities in Germany and the Netherlands. These international builds are part of a strategy to address data sovereignty laws, which require data to be stored and processed within national borders. Oracle’s distributed cloud portfolio is designed to meet these requirements by deploying a cloud stack within a customer's own data centre or a specific country. 

Financials underpin Oracle's data centre strategy

The company’s investments are translating into revenue growth. In the fourth quarter of fiscal year 2025, Cloud Infrastructure (IaaS) revenue was US$3bn, a 52% increase. Safra projected that the Cloud Infrastructure growth rate is expected to increase from 50% in FY25 to over 70% in FY26. 

A key financial metric is its Remaining Performance Obligations (RPO)–the value of contracted, unfulfilled services. Oracle's RPO grew from US$80bn in Q3 2024 to US$455bn by the first quarter of fiscal year 2026, an increase of 359% from the prior year.

“We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply,” Safra said.

The company’s multicloud strategy has also become a source of revenue. Offerings like Oracle Database@Azure allow customers to run Oracle databases in other clouds. 

Its number 16 position on Data Centre Magazine's Top 100 list captures a specific point in its development. While current market share reports place Oracle in the low single digits, other metrics indicate a change.