Oracle is approaching its next earnings report with two very different forces shaping the investment narrative: rapidly expanding demand for AI cloud infrastructure and fresh scrutiny from European antitrust regulators. The European Commission is gathering information about Oracle’s licensing practices, raising questions over whether contractual terms could restrict customers from shifting workloads between cloud providers at a time when competition across the sector is intensifying.

EU Regulators Put Oracle’s Cloud Licensing Under Review

The European Commission is examining Oracle’s licensing practices following concerns that its commercial terms could make it more difficult for customers to use competing cloud infrastructure providers such as Amazon Web Services, Microsoft Azure and Google Cloud. According to Reuters, the Commission is currently seeking information from third parties to determine whether there is evidence that would justify further action.

Importantly, there is no formal antitrust investigation against Oracle at this stage. A European Commission spokesperson said regulators would continue monitoring potentially anticompetitive practices in the cloud sector, while the information-gathering process could either lead to a formal case or end without further action.

The timing nevertheless matters. The review follows a July agreement involving SAP, under which the German software company agreed to make it easier for customers to switch service providers or terminate contracts. SAP’s case provides a precedent for how European regulators could approach software licensing practices that potentially create barriers to customer mobility.

Oracle’s AI Growth Story Remains Strong

The regulatory scrutiny arrives as Oracle is undergoing one of the largest strategic shifts in its history. The company’s fiscal 2026 results showed total revenue of $67.4 billion, up 17% year over year, while total cloud revenue increased 39% to $34 billion. Cloud infrastructure revenue was particularly strong, rising 77% to $18.1 billion.

Oracle’s remaining performance obligations, a measure of contracted revenue yet to be recognized, reached $638 billion at the end of fiscal 2026, up 363% year over year. Oracle said much of the increase came from large-scale AI contracts, including arrangements where customers prepaid for GPUs or supplied the hardware themselves.

That backlog is central to the investment case surrounding Oracle. The company has forecast $90 billion in fiscal 2027 revenue and expects total cloud revenue growth of between 58% and 64% in U.S. dollars for the first quarter.

Why Licensing Rules Could Matter for Oracle’s AI Infrastructure

The antitrust issue is potentially more important because Oracle is investing heavily to become a larger provider of AI cloud capacity. The company reported negative free cash flow of $23.7 billion in fiscal 2026 as it expanded its cloud infrastructure, while it expects to raise approximately $40 billion through debt and equity financing during fiscal 2027.

Oracle’s business model therefore depends on converting enormous AI infrastructure commitments into long-term customer consumption and revenue. If regulators were ultimately to require changes to licensing practices, the impact would extend beyond a potential financial penalty. Changes to contract structures could influence customer retention, switching behavior and the economics of Oracle’s multicloud strategy.

At the same time, more flexible licensing could potentially strengthen Oracle’s position by reducing concerns among enterprise customers about being locked into one provider. The regulatory question is therefore not necessarily whether Oracle’s cloud strategy is weakened, but whether its commercial model must evolve as the European market places greater emphasis on cloud portability and customer choice.

Earnings Will Test Whether Growth Can Outrun the Regulatory Risk

Oracle is scheduled to report its fiscal first-quarter 2027 results on September 10 after the close of the U.S. market. Investors will be watching cloud infrastructure growth, new AI contracts, remaining performance obligations, capital expenditures and cash flow alongside management’s commentary on the regulatory environment.

The earnings report also comes after a period in which Oracle has dramatically increased its financing requirements to support data-center expansion. While customer prepayments and customer-supplied GPUs reduce part of the funding burden, the scale of the infrastructure program leaves the company sensitive to construction delays, financing costs, hardware availability and the pace at which contracted demand converts into reported revenue.

For investors in Israel and global markets, the central question is increasingly whether Oracle can sustain exceptional AI-cloud growth while maintaining a commercially flexible model under tightening regulatory scrutiny. The September 10 results could provide an important update on that balance, while developments from European regulators will determine whether the current licensing review remains a limited information-gathering exercise or develops into a broader challenge to Oracle’s cloud business model.