Oracle’s $638B AI Backlog Grows, Stock Down About 50%

Oracle reported $638 billion in remaining performance obligations (RPO) and fiscal fourth-quarter revenue of $19.2 billion, but its share price is down roughly 50% as investors flagged concentration, capital spending and planned financing.

For the quarter, total cloud revenue rose 47% to $9.9 billion and Oracle Cloud Infrastructure revenue increased 93% to $5.8 billion. The company said RPO rose by $85 billion sequentially and was up 363% year over year.

Oracle reported that much of the RPO growth came from large AI contracts. Some customers prepaid for GPUs; others supplied their own hardware. Those arrangements reduce Oracle’s immediate capital outlays while creating large prepaid or contracted balances on the books.

Analysts have focused on how concentrated the backlog is and how quickly it will convert into recognised revenue and cash. Bank of America analysts estimate more than half of the $638 billion RPO is tied to a single customer, OpenAI. That level of concentration raises questions about the stability of future receipts if that customer changes spending patterns or requires external financing.

Oracle expects fiscal 2027 capital expenditures of up to $95 billion, above earlier estimates near $67.7 billion, and plans to raise nearly $40 billion through a mix of debt and equity. CFO Hilary Maxson told investors that about $70 billion of the spending would be funded by Oracle, while $20 billion to $25 billion is expected to be repaid by customers.

Commentary from market analysts highlighted two separate issues: strong demand for AI cloud capacity and uncertainty over funding and conversion of contracts into cash. Jacob Bourne of eMarketer warned, “the demand is real,” and added that funding becomes harder when capital spending exceeds expectations and free cash flow is negative. Dan Ives of Wedbush described additional borrowing as “not a move the Street wants to see.” Mizuho’s Siti Panigrahi continues to project Oracle as a long-term AI player and maintains a $320 price target.

Analyst coverage remains broadly positive by historical standards: roughly 84% of analysts rate Oracle a Buy, with an average price target near $255.

Market attention has shifted from headline demand figures to the timeline and mechanics for converting large multiyear agreements into recognised revenue and cash flow, and to how planned capex and financing will be allocated between Oracle and its customers.