Oracle’s $40 Billion Capital Gambit: Can It Bridge the Gap Between a $638 Billion Backlog and a $23.7 Billion Cash Drain?
Published on 06/26/2026 at 18:06 | Redaktion boerse-global.de
Oracle’s latest financial results tell two sharply different stories. On one side, the cloud infrastructure business is on fire: revenue surged 93% in the fiscal fourth quarter, the total cloud segment jumped 47%, and the company’s remaining performance obligations – a measure of contracted future revenue – rocketed to $638 billion, up 363% year-over-year and $85 billion from the prior quarter. On the other side, the company burned through $23.7 billion in free cash flow during fiscal 2026, spent $55.7 billion on capital investments, and now plans to raise $40 billion through a mix of debt and equity to fund the next leg of expansion. The disconnect between operational triumph and financial strain has sent the stock tumbling.
Over the past seven days, Oracle shares have lost roughly 17% of their value, closing Thursday at €134.12 before sliding further to €132.54. That leaves the stock more than 52% below its 52-week high and roughly 20% lower year-to-date. Technical indicators signal extreme weakness: the relative strength index hovers near 30, with one analyst reading 30.4 and another 31.1 – both just above the classic oversold threshold of 30. The shares now trade nearly 18% below their 50-day moving average, underscoring the depth of the sell-off.
The immediate trigger for the rout is not the quality of Oracle’s order book but the mechanics of how it plans to finance its AI build-out. A $20 billion at-the-market equity offering, activated via a prospectus supplement filed on June 23, 2026, allows Oracle to sell shares incrementally into the open market. Analysts estimate this program could introduce over 100 million new shares, diluting existing holders at a time when the company is also piling on debt. The 21,000 job cuts announced recently add to the sense of a company squeezing every lever to fund its $70 billion capital expenditure plan for fiscal 2027.
Should investors sell immediately? Or is it worth buying Oracle?
The bull case rests on a simple arithmetic: demand continues to outstrip supply. Oracle’s GPU utilisation rate hit 97.5% in the latest quarter, effectively at capacity. The company signed $67 billion in new contracts during Q4 alone and delivered more than 1.2 gigawatts of computing capacity over the full fiscal year. Crucially, $75 billion of the backlog comes from customers that either prepaid for GPU capacity or supplied their own hardware, reducing Oracle’s need for fresh equity. Management affirmed a fiscal 2027 revenue target of $90 billion and raised non-GAAP earnings guidance to $8.05 per share, projecting 25% annual revenue growth over the next three years – well above the 17% expected for the US software sector. The consensus analyst price target of €221.14 implies a nearly 67% upside from current levels.
The bear counterargument is equally concrete. The $23.7 billion negative free cash flow in fiscal 2026 was a drastic swing from a barely-negative figure the prior year. Planned capital spending of $70 billion for fiscal 2027 exceeds the $40 billion financing package, meaning the shortfall will have to be covered by further borrowing or additional share sales. The ATM program is already live, and each new share sold chips away at per-share metrics. Adding to the worry, a reported $3 billion-plus cloud infrastructure leasing deal with Microsoft collapsed over what sources describe as security and compliance concerns. If Oracle’s public cloud lacks the FedRAMP certification required for US government data workloads – a claim the company disputes – it would be locked out of the most profitable segments of the market, precisely where Amazon Web Services and Google Cloud are strongest.
Beyond the core cloud business, Oracle is quietly building a defence technology portfolio. At a summit in Brussels, the company announced ten new partners for its defence ecosystem, focusing on autonomous systems and cybersecurity. One showcase project, the “Saga” system, was deployed by the British Royal Navy to collect data in network-denied environments. While still a small contributor to revenue, the defence push diversifies Oracle’s government exposure away from the FedRAMP headache.
The next hard data point will arrive with Oracle’s fiscal first-quarter 2027 results, expected in the third calendar quarter of 2026. By then, investors will see how quickly the company is converting its OCI backlog into recognised revenue and how much the ATM program has already swollen the share count. Until those numbers land, the market will keep weighing a record order book against the relentless cash burn needed to fulfill it.
Ad
Oracle Stock: New Analysis - 26 June
Fresh Oracle information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
