Oracle’s remaining performance obligations (RPOs) now exceed those of Alphabet and Microsoft and have also surpassed the company’s own market value.
- “Big Red” is under scrutiny for taking on heavy debt to fund new data centers and infrastructure built for future orders from a small set of customers, chiefly OpenAI.
- Oracle’s backlog surged 363% to a record $638 billion in the fourth quarter.
- Stocktwits sentiment for ORCL was ‘bearish.’
Oracle Corp.’s market capitalization dropped to $530 billion as the stock tumbled sharply from its record high on June 1, now below the amount it is set to receive from future orders.
While market capitalization and remaining performance obligation (RPO) are not the most common comparisons, they're notable in Oracle’s case. The Big Red is under the scanner for taking on heaps of debt to build new data centers and infrastructure to support future orders from a handful of customers, chiefly OpenAI.
Balance Sheet Risks Linger For ORCL
Oracle’s stock dipped 1.8% in the overnight session ahead of Monday, after a flat move last week.
Investors see Oracle in a risky position, especially since OpenAI has fallen behind rival Anthropic in market value and, reportedly, in annualized revenue as well. Recently, OpenAI’s major backer, SoftBank, reportedly shelved plans for a $6 billion margin loan backed by its OpenAI stake due to investor skepticism over the value of the shares.
Oracle last week denied a source-based report in Business Insider that said one of its cloud deals with Microsoft had fallen through because Oracle's public cloud lacked the Federal Risk and Authorization Management Program, a required security framework for handling U.S. government data.
Oracle’s Orders, Debt Climb
Earlier this month, Oracle reported fourth-quarter results that beat expectations and said backlog surged 363% to a record $638 billion. But it also forecasts up to $95 billion in capital expenditure for fiscal 2027, following $55.7 billion in spending last fiscal.
To achieve that, Oracle would raise $40 billion in debt and equity this fiscal year, including $20 billion through a previously announced program to sell shares in the open market. In the fiscal year just ended, Oracle raised $43 billion in debt financing and $5 billion in equity.
Oracle’s future business backlog now exceeds that of both Alphabet and Microsoft, whose RPOs, largely tied to their cloud operations, stood at $627 billion and $460 billion, respectively, last quarter.
On the other hand, Oracle’s total liabilities, including debt, jumped by 48% to $218.7 billion in the fourth quarter – the sharpest surge on record. ORCL stock has declined about 26% from its record high at the start of June.
Retail View On ORCL
On Stocktwits, retail sentiment for ORCL was ‘bearish’ as of early Monday hours, unchanged since Thursday, while message volume dropped 60% over the past week. Traders, however, are very much keyed into the stock, with followers on the platform up more than 8% over the past 90 days.
“$ORCL prolly will take a diarrhea dump at open tomorrow… getting tired of this,” remarked a trader.
On the other hand, some appeared patient. “The price action on $PLTR and $ORCL is incredibly clean right now. Tightly consolidated daily candles on declining volume tell me that the selling pressure is completely exhausted. The moment the index stabilizes, these two are going to rip violently,” said a trader.
ORCL shares are down 5% year to date, compared to the 19.4% gains in the tech-heavy Invesco QQQ Trust Series 1 ETF (QQQ).
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