Oracle Corporation (NYSE:ORCL) closed at $147.76 on Monday, declining 0.52% even as broader U.S. technology stocks rallied. The stock gave up early gains tied to AI infrastructure optimism, trading between $145.20 and $154.50 on volume 126% above its 65-day average, according to MarketWatch.
The company's remaining performance obligations—contracted revenue not yet recognized—soared to $638 billion, roughly 1.5 times its market capitalization of approximately $430 billion. However, CFO Hilary Maxson said only 12% of that backlog, or $76.56 billion, is expected to be realized in the next 12 months, with another 34% over the following two years.
Oracle projects net capital expenditures of about $70 billion for fiscal 2027, nearly matching the anticipated backlog conversion for next year. The company also plans to raise approximately $40 billion through debt and equity offerings to fund its data center buildout, signaling a shift from traditional software company to capital-intensive infrastructure provider.
CEO Clay Magouyrk defended the spending, stating that delivery pace "continues to accelerate" and that first-quarter delivery approached one gigawatt, nearly matching the total of the prior four quarters combined. However, Maxson warned that gross margins would "step down" as data center projects ramp up.
Analysts remain largely bullish, with 28 strong buys, eight buys, five holds, and one strong sell among 42 ratings, according to StockAnalysis. KeyBanc's Jackson Ader maintained a $300 target, while Jefferies' Brent Thill kept a $320 target as of late June.
The stock is caught in a growing divide in the AI trade. "AI is working for the providers. It is not working for the spenders," said Jake Dollarhide, CEO of Longbow Asset Management. Goldman Sachs analyst Kamakshya Trivedi noted the split is "most acute in the AI space."
Oracle's headcount dropped 13% to 141,000 in fiscal 2026, cutting about 21,000 jobs, while restructuring charges jumped to $1.84 billion from $374 million. Despite cost-cutting, the company has signed large data center contracts with OpenAI and Meta Platforms (NASDAQ:META) to compete more aggressively with Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).
With contracted revenue for next year only slightly exceeding planned net capex, any delivery miss, margin compression, or rising funding costs could erode the perceived safety of Oracle's massive backlog, leaving investors exposed to execution risk.
