Oracle's $638 Billion Backlog Faces Q1 Test Thursday

Earnings Impact 4
โดย Zacks Investment Research·US·Read original
Summary · why it matters

Oracle reports fiscal first-quarter results Thursday after the close, with investors focused on whether its $638 billion remaining performance obligation—a backlog that grew 363% last year and dwarfs its $67.4 billion annual revenue—converts into revenue as promised. The Zacks Consensus Estimate calls for earnings of $1.74 per share on revenue of approximately $19.14 billion, implying growth of more than 28%, within management's guidance for a 27% to 29% increase. The key metric is cloud revenue, guided to expand 58% to 64% year over year, and a miss would raise doubts about the backlog's conversion pace. The stock is down 17.7% year to date despite strong operating momentum, as investors worry about financing: free cash flow was negative $23.7 billion in fiscal 2026, capex jumped 162% to $55.7 billion, and new CFO Hilary Maxson guided fiscal 2027 net cash capex to roughly $70 billion. To fund this, Oracle plans to raise $40 billion through debt and equity, including a $20 billion share sale, and S&P Global downgraded its credit rating to BBB-. Bank of America estimates OpenAI accounts for more than half of the backlog, and OpenAI's heavy losses and delayed IPO add concentration risk. Oracle trades near 20 times forward earnings against fiscal 2027 EPS guidance of $8.05, with a wide range of Wall Street price targets reflecting genuine disagreement over the backlog's value.

Impact on stocks 3

Cloud & Digital Infrastructure▼ · 2 stocks
Oracle Corporation
ORCL
▼ NegativeCapitalrelevance

Q1 results test backlog conversion; financing concerns, capex, and credit downgrade weigh.

S&P Global Inc
SPGI
▼ NegativeCapitalrelevance

S&P downgraded Oracle's credit rating to BBB-, a negative action.

Financials▲ · 1 stocks

Theme Impact 3

Off-coverage companies 1

OpenAIPrivate▼ Negative
Demandrelevance

OpenAI's heavy losses and delayed IPO add concentration risk to Oracle's backlog.

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