Austin, June 3, 2026, 10:05 (CDT)
Oracle shares dropped over 5% Wednesday morning as some of the AI-fueled gains came off. Investors refocused on the expense of scaling up cloud infrastructure tied to Oracle’s growth pitch. The stock was last seen at $231.41, down 5.4%, for a market cap near $674 billion.
Oracle is set to report fiscal Q4 earnings after markets close on June 10, putting a spotlight on whether investors will keep backing Oracle’s AI backlog as capital expenditure continues to grow. Spending on areas like data centres and equipment has been climbing.
Alphabet’s plan to sell $80 billion in stock is putting a spotlight on how much cash tech giants will need to fund AI buildouts—and who ends up holding the risk ahead of any payback. Oracle shares dropped in premarket Tuesday after the Alphabet announcement. Microsoft and Amazon were also down in early trading Wednesday.
Oracle is now rated Hold by Seeking Alpha contributor Oliver Rodzianko. Rodzianko said Oracle shares had climbed over 75% since February. He flagged rich valuation, big capital spending, and free cash flow issues. At the same time, he noted Oracle’s $553 billion AI backlog and 84% Oracle Cloud Infrastructure growth.
Oracle’s numbers lay out the split views on the stock. Remaining performance obligations, or RPO, hit $553 billion at the end of the third quarter. That’s up 325% over the past year, mostly boosted by big AI deals. The company said much of the hardware needed was either prepaid by customers or provided by them, including graphics processing units, the chips for training and running AI models.
Oracle puts up cash numbers. The company projects $67 billion in revenue for fiscal 2026 and capex of $50 billion, with fiscal 2027 revenue guidance rising to $90 billion. Free cash flow was negative $24.7 billion over the trailing four quarters for the third quarter, as capex hit $48.3 billion.
Oracle says it wants to raise as much as $50 billion through debt and equity. The company has already brought in $30 billion from investment-grade bonds and mandatory convertible preferred shares, but hasn’t begun the at-the-market equity part yet.
Oracle is still on some investors’ lists as a software name that has space to adjust. Marc Dizard, chief investment officer at Huntington National Bank, told Reuters he favors Oracle since its big customer base gives it “more time to get their pricing model correct.” Reuters
Software stocks are doing better. Daniel Morgan at Synovus Trust said AI is “remapping the industry rather than destroying it.” Cantor’s Thomas Blakey saw software names turning into “beneficiaries of AI” after recent earnings. Investors are picking Oracle, Microsoft, Datadog, Palo Alto Networks and Synopsys as top choices in the AI software comeback, Reuters reported. Reuters
Oracle is still active in hardware. Arm CEO Rene Haas said at Computex that both Oracle and ByteDance use Arm’s AGI CPU chips for general computing inside AI data centers.
But Oracle faces some timing risks. If customer deployments are delayed, chip supplies get tighter, or spending slows, or if prepayments end up covering less of the expansion, then Oracle may have to absorb debt payments and data-center costs before seeing any cash from its backlog. Reuters said Wednesday Meta, Oracle and other tech names have sold $250 billion of global debt this year. The cost of Oracle’s five-year credit default swap is now at 150 basis points, up from about 30 basis points a year ago, a sign of investors seeing more credit risk.
Oracle now faces a straightforward but tough job heading into earnings: show the $553 billion backlog can turn into revenue fast enough, and with enough profit, to make the spending worth it. The market isn’t just interested in size—it wants to see results.
