Oracle’s Q4 Backlog Soars As Shares Sink

Oracle's latest report put the database giant into a growing club of AI winners whose shares are being weighed down by the cost of winning. The company reported fiscal fourth-quarter revenue of $19.2 billion, up 21% from a year earlier, while non-GAAP earnings rose 24% to $2.11 per share. Cloud revenue jumped 47% to $9.9 billion, including a 93% surge in cloud infrastructure revenue to $5.8 billion. Shares were down about 9% late Thursday anyway, showing that even a massive backlog can lose some shine when free cash flow is moving the wrong way.

Oracle’s remaining performance obligations climbed to $638 billion, up 363% from a year earlier and $85 billion higher than the previous quarter, giving the company one of the biggest backlogs in enterprise tech. Management said much of the recent increase came from large-scale AI contracts where customers prepaid for GPUs or supplied the hardware themselves, pushing those prepaid and customer-supplied hardware commitments to $75 billion. That helps Oracle argue it is not simply building data centers and hoping customers show up. In this case, plenty of customers already appear to be in line.

The trouble is that Oracle still has to build the cloud capacity before it can fully turn that backlog into revenue. Free cash flow was negative $23.7 billion in fiscal 2026, even as operating cash flow rose 54% to $32.0 billion. Oracle also raised $43 billion in debt financing and $5 billion in equity financing during the year, and now expects to raise roughly $40 billion more through debt and equity in fiscal 2027, including a previously announced $20 billion at-the-market equity program. The stock reaction showed that investors were not blindly impressed by the size of Oracle’s order book, but were looking more closely at how much balance-sheet pressure it will take to serve it.

Management’s guidance suggested the backlog is not just sitting on paper, but should start showing up in revenue soon. Oracle expects first-quarter revenue growth of 27% to 29%, cloud revenue growth of 58% to 64%, and confirmed its fiscal 2027 revenue target of $90 billion while raising its non-GAAP earnings outlook to $8.05 per share. But after a year where Oracle spent and financed like an AI hyperscaler, growth alone may not be enough. Oracle has the orders, the growth, and the ambition. What investors want next is proof that the balance sheet will not get stuck carrying the entire data-center circus.

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