NEW YORK, July 2, 2026, 12:06 EDT
- Oracle’s backlog has edged ahead of Microsoft’s, but its equity value is just about one-seventh of Microsoft’s.
- Oracle’s capex plan for fiscal 2027 tops the amount of backlog it aims to convert to revenue in the coming year.
- OpenAI’s funding track is still the key swing variable for the trade.
- Oracle was down 0.9% at $141.27 late Thursday morning.
Oracle NYSE:ORCL is trading less like a typical software name and more like a buildout on credit, with $638 billion in future contracted revenue, a $411 billion market cap, and cash outflows that are outpacing near-term revenue realization.
Oracle shares changed hands at $141.27 as of 11:48 a.m. EDT, off 0.9% for the session and putting the company’s market cap near $411.4 billion. Microsoft NASDAQ:MSFT was much larger, with a market value around $2.90 trillion.
Oracle said in June its remaining performance obligations jumped $85 billion for the quarter, reaching $638 billion, a jump of 363% from a year ago. The company reported a negative fiscal 2026 free cash flow of $23.7 billion. Oracle also said $75 billion in hardware from customers, either prepaid or supplied, was tied to big AI deals. Microsoft reported $627 billion in commercial remaining performance obligations for its fiscal third quarter.
| Metric | Oracle NYSE:ORCL | Microsoft NASDAQ:MSFT |
|---|---|---|
| Contracted future revenue / RPO | $638 bln | $627 bln |
| Current market value | $411 bln | $2.90 trln |
| RPO as share of market value | 155% | 22% |
| RPO gap | Oracle ahead by $11 bln | — |
The gap is the trade here. Oracle’s backlog looks similar to Microsoft, but the stock price doesn’t show as much balance-sheet strength. The discount isn’t only about demand. It’s a question of whether Oracle can add enough data-center capacity before the equity story turns into a debt story.
Oracle is on a tight schedule. The company says it will recognize about $76.6 billion of RPO over the next year. Its fiscal 2027 capex plan could hit $95 billion, including about $70 billion in net cash outlay. Oracle also plans around $40 billion of debt and equity financing.
| Investor question | Data point | Read-through |
|---|---|---|
| Is backlog enough to pay for the build? | $76.6 bln next-12-month RPO against up to $95 bln FY2027 capex | Total capex runs about 124% of what should convert from RPO soon |
| How much does Oracle put up on its own? | Net cash outlay around $70 bln | That’s about 91% of near-term RPO conversion |
| Does upfront customer money matter? | $75 bln prepaid or with hardware from customers | This cuts funding needed, but Oracle keeps the delivery risk |
| Can you see the demand? | $638 bln RPO, up 363% | Demand is signed, but conversion timing is in question |
Oracle CFO Hilary Maxson told analysts the investments are tied to “committed customer demand.” Maxson also said customer prepayments and bring-your-own-hardware deals might offer “similar or better margins” compared with other contracts, according to Fast Company’s report from the post-earnings call. Fast Company
Capacity remains tough. Oracle CEO Clay Magouyrk said first-quarter deliveries were “approaching one gigawatt”—nearly matching its total output for the last full year, Diginomica reports, citing transcript snippets. diginomica
OpenAI remains the big risk Oracle holders keep pricing. Last week, Reuters said OpenAI might hold off on an IPO until 2027. The company is looking at a target valuation up to $1 trillion. Oracle shares dropped after that hit the wires, since its AI business relies heavily on OpenAI-related demand.
OpenAI’s approach to funding saw a political twist Thursday. According to Reuters, which cited the Financial Times, OpenAI discussed a possible 5% stake for the U.S. government. Forrester analyst Indranil Bandyopadhyay told Reuters a move like this might lower U.S. regulatory pressure, but could set off similar demands from other governments.
Oracle hands its critics plenty to work with in its own filings. Gizmodo flagged the annual report’s warnings about slowing builds, supply snags, rising power bills, regulation and customers with heavy debt loads. These aren’t just theory—one private AI client can swing Oracle’s market cap by billions.
Yahoo and The Motley Fool pointed to Oracle’s $638 billion backlog and shares near an 18-month low as a bull case, but investors are watching if 12% near-term RPO conversion covers spending that’s now at hyperscaler levels.
24/7 Wall St. noted William Blair put Oracle on its conviction list, with shares priced at about 18 times expected earnings. That valuation only works if AI deals pay off and don’t just rack up more debt-funded capacity.
