Oracle (NYSE: ORCL)) latest earnings show how fast AI is changing its cloud business. They also point to a growing challenge. The company needs to build more data centers to meet AI demand. At the same time, it must manage the emissions, electricity, and water that come with that growth. The growth creates a major opportunity for Oracle.
But it also raises a key question: how much power and water will the company need to support the next phase of AI growth?
Oracle’s AI Cloud Surge Powers a Record Quarter
Oracle reported fiscal first-quarter 2027 revenue of $19.3 billion, up 30% from a year earlier. Cloud revenue rose 62% to $11.6 billion. Cloud infrastructure revenue more than doubled, rising 121% to $7.4 billion.
GAAP earnings per share increased 55% to $1.56. Adjusted EPS rose 30% to $1.92. Net income reached $4.76 billion, up 63%.
The company also added more than $30 billion in AI cloud contracts during the quarter. Its remaining performance obligations reached $664 billion.
Additionally, it delivered 850 megawatts of additional data center capacity during the quarter. It said demand for AI training and inference services still exceeds available supply.
ORCL Stock Faces the Cost of AI Expansion
The strong earnings came as Oracle continued to spend heavily on infrastructure. The company invested $28.5 billion in capital expenditures during the first quarter.
Oracle expects fiscal 2027 capital spending to reach about $90 billion to $95 billion. Free cash flow was negative $5 billion in the first quarter as the company continued to expand its cloud infrastructure.
This spending also has a sustainability impact.
Every new data center requires power, cooling systems, construction materials, and water. The efficiency of those systems will affect both Oracle’s environmental footprint and the cost of expanding its cloud business.
On September 15, ORCL closed at about $140.35, down 3.07% for the session. Oracle shares have gone down 16.5% over five sessions.
Oracle’s Net-Zero Plan Covers Its Supply Chain
Oracle has set a net-zero emissions target for 2050. It also plans to cut Scope 1, Scope 2, and Scope 3 emissions by 50% from a 2020 baseline by 2030.
The company says it will focus first on direct emissions cuts. It plans to use high-quality carbon offsets for no more than 10% of its base-year emissions that it cannot eliminate directly.
And the Exponential Roadmap Initiative has approved Oracle’s targets.
Scope 1, 2, and 3 Data
Oracle’s latest emissions data also shows the impact of its rapid infrastructure growth. It reported 27,532 metric tons of Scope 1 emissions in FY2025. That was down from 29,930 tons in FY2024.
Market-based Scope 2 emissions also fell. They declined to 237,251 tons from 271,188 tons.
However, Scope 3 emissions moved in the opposite direction. They were 8.53 million metric tons in FY2025. That compares with 2.69 million tons in FY2024.
Capital goods made up about 6.96 million tons of the FY2025 Scope 3 total. This category includes emissions linked to infrastructure and equipment purchases.
- Overall, Oracle reported 8.79 million metric tons of combined Scope 1, 2 and 3 emissions on a market-based basis in FY2025. The figure was 2.99 million tons in FY2024.
The increase shows how infrastructure spending can affect a cloud company’s wider carbon footprint.
Renewable Power Is Expanding
In the sustainability report, renewable electricity covered 92% of electricity used in its cloud operations in FY2025. That was up from 88% in FY2024.
Across its real estate and facilities, renewable electricity coverage reached 85%.
More importantly, Oracle has also set a target to reduce carbon emissions per megawatt of IT capacity by 20% by 2030. As AI workloads require more computing power, improving the emissions intensity of each megawatt will become more important.
Water Is Becoming a Bigger Data Center Issue
Energy gets much of the attention surrounding AI data centers, but water is becoming another important constraint.
- It used about 802 million liters of potable water in FY2025, down from approximately 824 million liters in FY2024. The company also recycled about 378 million liters of water during the same year.
- Potable water use per square foot declined slightly to 42 liters from 43 liters.
Oracle’s sustainability strategy now includes a goal of reducing water use by 50% in water-stressed regions by 2035, relative to a 2025 baseline. The company also aims to reduce carbon emissions per megawatt of IT capacity by 20% by 2030.
The targets are becoming particularly relevant as Oracle develops larger AI-focused facilities.
Project Jupiter Takes a Different Approach to Water
Oracle’s Project Jupiter in New Mexico provides a closer look at how the company is trying to address the environmental footprint of hyperscale computing.
The 1,400-acre campus in Doña Ana County is being developed as a large-scale AI and cloud data center. Oracle has shifted the project’s power strategy toward Bloom Energy fuel-cell technology, replacing an earlier design based on gas turbines and diesel generators.
It says the fuel-cell system will significantly reduce emissions and water use compared with conventional combustion-based generation.
Water is especially important to the project because of conditions in southern New Mexico. Oracle says Project Jupiter will use non-potable water and that, averaged over 15 years including the initial fill, its water use will be equivalent to less than nine single-family homes.
The company is also trying to offset more water than the project itself consumes through local conservation.
Oracle Wants to Save More Water Than Jupiter Uses
In August, Oracle also announced a partnership with agricultural technology company Arable to improve irrigation efficiency in the Rio Grande-Bravo watershed.
- The initiative is expected to conserve approximately 21 million gallons of water annually.
- This amount is more than 20 times the water required to operate Project Jupiter’s cooling and power systems.
Arable will use field sensors, weather information, and crop data to help farmers make more precise irrigation decisions. Oracle says an independent third party will validate the water savings using a recognized methodology, with validation reports made public.
Oracle has also committed $50 million toward local water and wastewater infrastructure in Doña Ana County.
The approach moves beyond simply reducing data center water consumption. It combines operational efficiency with investment in watershed-level conservation, which could become increasingly relevant as data center construction expands into water-stressed regions.
Expanding a Cleaner Power Mix for Jupiter
Oracle’s sustainability strategy around Project Jupiter also extends to electricity.
Recently, the company issued a request for proposals for 2 gigawatts of new renewable energy capacity in New Mexico, including solar, wind, and geothermal projects. Oracle said the initiative is intended to support Project Jupiter’s goal of achieving 100% carbon-free energy matching by 2031.
As per reports, Oracle is also planning a public environmental dashboard for Project Jupiter. The dashboard is expected to provide information on water use, emissions, heat, air, noise and light once the facility is operational.
It also plans twice-yearly assessments by an independent third party comparing performance against baseline conditions and relevant standards.
For a company expanding its cloud infrastructure at triple-digit rates, greater transparency could become increasingly important.
The Bottom Line: AI Growth Is Raising the Sustainability Stakes
Oracle’s Q1 results demonstrate the scale of the AI infrastructure opportunity. Cloud infrastructure revenue more than doubled, the company’s backlog reached $664 billion, and hundreds of megawatts of additional data center capacity were brought online.
Yet the same expansion is increasing Oracle’s exposure to energy consumption, construction-related emissions, water availability and infrastructure costs.
The company’s sustainability targets therefore sit alongside a much larger business transformation. Oracle is attempting to grow its AI and cloud infrastructure while reducing the emissions intensity of its operations, expanding renewable power and addressing water use at the local watershed level.
For investors watching ORCL, the story is no longer simply about how fast Oracle can build data centers. It is also about how efficiently and sustainably the company can power them.
As AI demand continues to drive Oracle’s cloud growth, energy and water management could become increasingly important measures of how the company’s infrastructure expansion develops over the next decade.