WSS: Oracle continues hyperscale cloud growth momentum as large-scale leasing continues and new operating groups form
A long earnings season has already come to a close, but different reporting cycles means Oracle released its latest results, which included more details about the Oracle Cloud infrastructure business. As we saw in the 1Q26 reporting period, hyperscale cloud platforms showed accelerating growth consistently across the board and it was the same for Oracle. The Oracle Cloud business turned in nearly $6b in quarterly revenue, growing at an elevated pace of 93% y/y. Oracle also saw its RPO number grow again, but this time it came with some useful guidance on timelines for revenue recognition on the balance sheet. There is a decent amount of the RPO pipeline set to move into live deployments and this give us some reason to be cautiously optimistic. Constraints around capacity are of course still real and we will see how this plays out in the next several quarters.
Large-scale deals continue to happen amid surging demand. Applied Digital followed up its recently confirmed second lease with an investment-grade hyperscaler, with a third lease. This hyperscaler now has three 15-year leases with Applied Digital spread across two locations for over 800MW of capacity. While data centre colocation capacity is in high demand, hyperscalers are also buying cloud infrastructure services to directly access GPUs. Google Cloud signed a large deal with SpaceX that will see it spend almost $1b a month. It is not clear if SpaceX is moving into the neocloud space or simply being opportunistic here in order to generate revenue from assets under its control. But it is clear that the demand is out there as Google is the second major customer at SpaceX’s data centre in Memphis, following the deal with Anthropic earlier this month. Both the Anthropic and Google deals have plenty of stipulations that could make this a relatively short-term relationship, with both sides getting something they badly need. Some of the answers to this question could come sooner than later. In other hyperscale deals, Meta leased a 168MW AI campus in India.
SpaceX may or may not be entering the data centre and cloud infrastructure space in a meaningful way, but new operating platform formation continues. Former QTS founder and CEO Chad Williams is back in the business and launched a data centre company called QII. Pronounced ‘Q-two’, the platform is like a number of recent entrants, looking to provide a range of capabilities across pre-development and resource aggregation, to powered shells, BTS and data centre colocation. QII is looking to build an integrated solution that caters to the next-generation requirements of hyperscale users.
New company formation is a healthy indicator for the sector and the investment levels and campuses being developed are also telling. In APAC, AirTrunk committed to investing around $30b in India through the rest of the decade, while DayOne just raised a Series C of $4.5b to fund its growth in APAC and Europe. Meanwhile, west Texas continues to see aggressive building and PowerBridge made more progress on the 2GW campus it is planning in Pecos, Texas.
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