Oracle Is Burning Cash in the Pursuit of "Hypergrowth." Is the AI Growth Stock a Buy Anyway?

By Daniel Foelber – Mar 17, 2026 at 12:49PM ESTKey PointsOracle is accelerating data center construction timelines and managing costs.It is justifying its spending by fulfilling highly profitable contracted capacity.Oracle’s cash burn is taking a toll on its balance sheet.There was a lot to like from Oracle's (ORCL 1.12%) latest quarterly results and guidance for the upcoming fiscal year. Oracle stock jumped in response to the earnings release but remains down 20% year to date at the time of this writing, badly underperforming the tech sector's 3.3% decline and the S&P 500's 2% drop. Here's why Oracle remains in "prove it" mode for investors as it burns cash at a breakneck pace, and some insight into whether the growth stock is worth buying despite its glaring risks. Image source: Getty Images. The cost of hypergrowth Oracle stock hit an all-time high last September after announcing a detailed roadmap for exponential artificial intelligence (AI) growth led by Oracle Cloud Infrastructure (OCI). But to pull it off, Oracle has to take on significant debt, because its database and data management software segment doesn't generate enough cash flow to cover costs. As investors digested the consequences of this debt, Oracle has undergone a massive sell-off over the last six months. And the cash burn has only gotten worse -- with Oracle reporting a staggering $43.8 billion in negative free cash flow (FCF) through the first three quarters of fiscal 2026, compared to $26.2 billion in positive FCF in fiscal 2025. Clay Magouyrk, Oracle co-CEO and head of OCI, addressed the cash burn on the third-quarter fiscal 2026 earnings call: The reason we are not even more profitable right now, despite the fact that we are continuing to grow EPS [earnings per share], etc., is because we have so much under construction at one time, and we have some expenses for those things. Now we are really good at that. We are very, very good at minimizing the time under which that construction is happening. We are very, very good at reducing those costs during that time period. But they are not zero. And so as our business is going through this hypergrowth phase, that is the only drag on profitability. But, thankfully, we are very good and getting better at delivering that capacity. That capacity, when we deliver it, is all already contracted for at a very profitable rate. So when you combine those things together, we are extremely confident in both the capacity we delivered and the continuing increase in profitability of our AI business. Oracle's overall costs are coming down as it gets better at operating its data centers through lower networking, hardware, and power costs. But its spending remains an issue. Oracle confirmed its earlier fiscal 2026 guidance of $67 billion in revenue and $50 billion in capital expenditures (capex), and announced $90 billion in anticipated fiscal 2027 revenue. But on the earnings call, management declined to give a firm fiscal 2027 capex number, preferring to wait until June when it provides full-year fiscal 2026 results. ExpandNYSE: ORCLOracleToday's Change(-1.12%) $-1.75Current Price$154.22Key Data PointsMarket Cap$449BDay's Range$153.80 - $158.9252wk Range$118.86 - $345.72Volume541KAvg Vol28MGross Margin64.30%Dividend Yield1.28% A bold bet on AI infrastructure Oracle is one of the most exciting AI stocks to buy now, but only for investors who can stomach the risks of operating with ultra-high leverage. Oracle's weak balance sheet makes it highly vulnerable to a slowdown in AI spending, and puts pressure on its customers to make good on their promises to book capacity. At the same time, OCI is purpose-built for AI. In addition to OCI-specific data centers, Oracle embeds native versions of its database services inside data centers managed by its multicloud partners -- Amazon, Microsoft, and Alphabet -- offering a compelling competitive advantage. Add it all up, and Oracle presents a high-risk, high-potential-reward scenario for growth stock investors.Read NextMar 17, 2026 •By John Ballard2 Unstoppable Tech Stocks to Buy Right Now for Less Than $1,000Mar 17, 2026 •By Daniel FoelberOracle Is Soaring After Blowout Earnings. 3 Reasons to Buy the Stock (and 1 Reason to Avoid It).Mar 16, 2026 •By Bram BerkowitzThe $110 Billion Catalyst That Makes It More Likely Oracle Will Hit Its 700% Cloud Infrastructure Revenue Growth Guidance by 2030Mar 16, 2026 •By John BallardOracle Just Posted Its Best Quarter in 15 Years -- Here's Why 2026 Could Get Even BetterMar 15, 2026 •By Catie HoganOracle Has Fallen 18% in 2026. Wall Street's Top Pick Just Set a $210 Price Target.Mar 14, 2026 •By Bram Berkowitz2 Artificial Intelligence (AI) Stocks With Average Upside of 47% and 54%, According to Wall StreetAbout the AuthorDaniel Foelber is a contributing Motley Fool stock market analyst with extensive experience covering the broader stock market and publicly traded companies across energy, industrials, utilities, materials, technology, communications, consumer discretionary, consumer staples, and financial stocks. Daniel looks for industry leaders offering compelling growth, value, or dividends to generate passive income. He has also written for energy trade publications and helped build oil and gas training modules. He holds a bachelor’s degree in finance and a certificate in personal financial planning from the University of Houston. He believes the best investors are those who focus on fundamentals, remain steady through volatility, and filter out market noise.TMFpalomino2Stocks MentionedOracleNYSE: ORCL$154.43(-0.99%)-$1.54*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.