The numbers coming out of Oracle are almost too big to process. A $553 billion backlog of contracted revenue, a $30 billion capital raise completed in days, and a cloud business growing at 84 percent. Yet the stock trades at $145.62 in Europe, nearly 48 percent below its 52-week high of $280.70, and has lost about 13 percent since the start of the year. The disconnect between Oracle’s ambition and its market valuation has rarely been starker.
The Bull Case: A Backlog That Defies Belief
Wedbush star analyst Dan Ives initiated coverage of Oracle on April 24 with an “Outperform” rating and a $225 price target, representing a 27.6 percent premium to the current level. Ives sees Oracle as the essential infrastructure backbone of the AI revolution, pursuing a two-pronged strategy: building high-performance cloud capacity for AI workloads while directly linking those models to customers’ enterprise data.
The backlog numbers support his thesis. Oracle’s remaining performance obligation, or RPO — contracted but not yet recognized revenue — surged 325 percent year-over-year to $553 billion in the third quarter of fiscal 2026. A single reported contract with OpenAI worth $300 billion is scheduled to begin contributing in 2027. Oracle Cloud Infrastructure revenue jumped 84 percent to $4.9 billion over the same period, with major clients including OpenAI at a $30 billion annual run rate, along with Meta and xAI.
The company argues that much of its infrastructure buildout is either pre-financed through customer payments or involves clients contributing GPUs directly, limiting Oracle’s own capital exposure. Meanwhile, Oracle is expanding its multicloud footprint aggressively: 33 Microsoft regions, 14 Google regions, and up to 22 planned AWS regions by the end of the fourth quarter.
The Bear Case: Debt That Strains the System
But the Wall Street Journal paints a far more troubling picture. Banks including JPMorgan Chase are hitting internal concentration risk limits when distributing loans for Oracle-leased data centers. Some lenders are now avoiding projects where Oracle appears as the tenant, forcing developers like Crusoe to partner with Microsoft instead.
Morgan Stanley credit analysts estimate that after roughly $50 billion in capital raised for the period from 2026 to early 2028, Oracle still needs more than $100 billion in additional financing. Net debt has climbed sharply, and free cash flow over the past four quarters sits deep in negative territory — driven by roughly $48 billion in capital expenditure. Credit default swaps on Oracle bonds have reached their highest level since 2008.
The long-term liabilities stand at $124.7 billion. Bulls counter that the negative cash flow is simply the price of building infrastructure for already-contracted AI workloads. But the timing mismatch is brutal: the costs hit the books now, while the revenue arrives later.
Should investors sell immediately? Or is it worth buying Oracle?
A $30 Billion Blitz in Days
In the midst of this uncertainty, Oracle pulled off an extraordinary financing maneuver. The company had announced a $45 billion to $50 billion funding plan to expand cloud capacity, financed through a mix of bonds, mandatory convertible notes, and an at-the-market program of up to $20 billion. Within days of the announcement, Oracle had already collected $30 billion. The order book was significantly oversubscribed, according to the company.
Ives views this as a strategic move to strengthen the balance sheet and secure resources for contractual commitments already made. But the sheer scale of the remaining need — more than $100 billion — raises questions about how much more the credit markets can absorb.
What the Market Is Pricing In
Of the 46 analysts covering Oracle, 35 rate the stock a buy. The consensus price target stands at $243.71, while the average target is $260 — implying substantial upside from current levels. But the range is enormous: Guggenheim sees fair value at $400, while RBC Capital puts it at just $160. Wedbush’s $225 target sits at the lower end of the bull spectrum.
The stock’s relative strength index sits near 21, a technically oversold reading that suggests considerable skepticism is already baked into the price. The question is whether that skepticism is justified or excessive.
The Next Test: June 10 and June 16
Two critical data points are coming. On June 10, Oracle reports fiscal fourth-quarter results. Management expects revenue growth of 19 to 21 percent and non-GAAP earnings per share between $1.96 and $2.00. On June 16, the company releases its full fourth-quarter fiscal 2026 report, with analysts expecting GAAP earnings of $1.95 per share.
These numbers will reveal whether the massive backlog is finally translating into recognizable revenue — or whether the financing concerns are dictating the pace. For now, Oracle remains a story of two irreconcilable realities: a backlog that promises extraordinary returns, and a debt load that threatens to choke them off before they arrive.
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