Oracle to invest $10bn in data centre expansion

Oracle’s company offices in Texas, US. (Image: Adobe Stock)

The company’s CEO, Safra Catz, made the announcement during Oracle’s third quarter earnings call on 12 March. Catz noted the numbers were preliminary and an improvement on 2024’s estimates.

“We’re looking at $10 billion for next year, [and for 2024] I’m looking at somewhere between $7 billion and $7.5 billion for the full year,” she said, noting 2024 “is actually a little bit lower” than her expectations.

The approximately 33% year-over-year increase in infrastructure spending follows an infrastructure cloud services revenue increase of 49%, reported by Oracle.

Catz said, if not for ‘supply constraints’, its Oracle Cloud Infrastructure segment could have reported higher gains.

“While we continue to build data centre capacity, overall growth margins will go higher as more of our cloud regions fill up,” Catz added. “As our supply constraints ease, revenue growth rate will accelerate higher as our capacity expands.”

Construction opportunities for data centre builds to grow

Larry Ellison, Oracle chief technology officer and company chairman, said, “Oracle has been building data centres at a record level.”

And the company is an example of a trend both in the US and worldwide.

Construction Briefing reported last November that demand for data centres has remained historically high globally despite being built at an all-time pace. 

Turner & Townsend’s Data centre cost index 2023 revealed in a survey that 83% of respondents said data centre construction has struggled to meet industry demand in the year. The average cost of data centre construction globally was reported up 6%, while costs increased by 8% in 2022. 

Simply, demand for data centres is not waning, nor is it expected to.

“We’re bringing on enormous amounts of capacity over the next 24 months because the demand is so high, we need to do that to just satisfy our existing set of customers,” said Ellison, acknowledging one major client. “We’re building 20 data centres for Microsoft and Azure. They just ordered three more data centres this quarter.”

Ellison noted, at least in Oracle’s case, it’s not just quantity of infrastructure projects, but the size of the schemes, as well.

“We’re also building the largest data centres in the world that we know of,” he said, illustrating the scope by noting one current project could fit eight commercial airplanes inside ‘nose-to-tail.’

The global data centre construction market is expected to grow annually at a compound rate of 6.5% and reach a value of $73 billion by 2028, according to Research and Market reports.