Oracle Corporation (NYSE: ORCL) saw its stock dip nearly 3% to $205.81 in early New York trading on Wednesday, as the market braces for the company's fiscal fourth-quarter earnings report after the closing bell. Investors are keenly focused on whether Oracle can convert its massive $553 billion AI cloud backlog into actual revenue fast enough to justify its heavy data-center spending.
Earnings Expectations and Key Metrics
Oracle is set to release its fiscal Q4 results on Wednesday, with a conference call scheduled for 4:00 p.m. Central Time. The stock has already lost about 16% over the past week, reflecting growing concerns over the company's debt and its exposure to major AI clients like OpenAI.
The key metric for Oracle is its remaining performance obligations (RPO), which represent future revenue from contracts not yet recognized. At the end of the fiscal third quarter, Oracle reported RPO of $553 billion, a staggering 325% increase from a year ago. Analysts at Visible Alpha, shared by S&P Global, estimate full-year RPO could reach $600 billion.
For the fourth quarter, Oracle is forecast to post revenue of $19.1 billion, up about 20% year-over-year. Full-year revenue is expected to jump 17% to $67.3 billion. Cloud sales are projected to rise 39% in fiscal 2026, accounting for more than half of Oracle's total revenue, according to S&P Global.
Options Market Signals Volatility
Options pricing suggests traders are bracing for a significant move. The market is pricing in an 11% swing in Oracle's stock price this week, either up or down, following the earnings release. This level of implied volatility underscores the high stakes surrounding the company's AI-driven growth narrative.
Wall Street Remains Bullish
Despite the recent sell-off, Wall Street analysts remain optimistic. Bank of America raised its price target for Oracle to $240, from $200, and maintained a buy rating. The firm cited higher demand for cloud and database workloads, as well as reduced concerns over funding after Oracle's recent financing steps.
Strong Q3 Performance Sets the Stage
Oracle's fiscal third-quarter results provided a solid foundation. Revenue came in at $17.2 billion, up 22%, while cloud revenue hit $8.9 billion, up 44%. Cloud infrastructure sales surged 84% to $4.9 billion. For the fourth quarter, Oracle guided for revenue growth of 19% to 21% in U.S. dollars and non-GAAP earnings per share between $1.96 and $2.00.
Competitive Landscape and AI Ambitions
Oracle is aggressively pursuing a larger share of the AI computing market, competing against much larger cloud players like Amazon Web Services (AWS) and Microsoft Azure. In March, Reuters reported that Oracle was making a major push into data centers for partners such as OpenAI and Meta. Jacob Bourne, an analyst at eMarketer, described the quarter as "a beat and a stress test" for Oracle's AI business.
Oracle executives believe the company can boost profitability by encouraging customers to use more add-on services alongside its core computing. Co-CEO Clay Magouyrk stated in March that Oracle Cloud Infrastructure's margins "continue to strengthen."
Bearish Risks Loom
However, there are clear downside risks. If data-center buildouts are delayed, capital expenditures exceed forecasts, or OpenAI's funding becomes shaky, Oracle's backlog could start to look more like a debt burden than booked business. OpenAI announced on Monday that it had confidentially filed for a U.S. IPO, though no timing decision has been made.
Oracle is guiding investors to expect $67 billion in fiscal 2026 revenue, with $50 billion in capital expenditures. The company also raised its fiscal 2027 revenue target to $90 billion. Whether these targets hold up as base cases or face increased scrutiny will likely become clearer with Wednesday's results.
