The number Wall Street wanted was the backlog, and Oracle delivered it. Then the stock dropped anyway.
Oracle reported fiscal fourth-quarter results after the closing bell. Remaining performance obligations, the contracted work the company has not yet billed, grew by $85 billion in a single quarter. The figure climbed from $553 billion to $638 billion. That is the metric investors fixated on going into the print, and it rose more than most expected.
Shares still fell about 7% in after-hours trading, slipping toward $187 from a regular-session close near $201. A record quarter was met with selling.
The Conversion Test Passed
The question coming into this report was whether Oracle's giant backlog was turning into revenue fast enough. The answer was yes.
Total revenue rose 21% to $19.2 billion. Cloud revenue grew 47% to $9.9 billion. The core of the AI story, cloud infrastructure, grew 93% to $5.8 billion. That is the segment renting computing power to companies training and running AI models.
Adjusted earnings came in at $2.11 per share, up 24% and well above the roughly $1.96 analysts expected. For the full year, Oracle earned $7.63 per share on an adjusted basis, with total revenue of $67.4 billion.
Why the Stock Sold Off
Strong results were not the problem. The spending behind them was.
To build the data centers that fill that $638 billion backlog, Oracle is guiding capital spending toward $80 billion to $100 billion next fiscal year, much of it tied to Project Stargate, the AI buildout it is constructing with OpenAI and SoftBank. That level of spending raises questions about debt, credit ratings, and free cash flow. A shareholder law firm opened an investigation last week into whether Oracle understated those exact risks.
So investors are weighing a clean beat against a balance sheet stretching to fund it. The same AI demand lifting the chip-equipment makers is forcing Oracle to spend ahead of the revenue, and the market is pricing the gap.
What It Means for the Stock
Even after the drop, near $187, Oracle trades around 23 times the $8.05 in adjusted earnings it now guides for fiscal 2027. The company lifted that profit forecast while holding its $90 billion revenue target for the year. Market value sits near $580 billion.
That multiple is not cheap for a company carrying heavy debt to chase growth. It is also not expensive if the backlog converts the way this quarter suggests it can. The bull case and the bear case point at the same two numbers: a backlog that keeps growing and a spending bill that keeps rising.
The next few quarters decide which number leads. If cloud infrastructure keeps compounding near triple-digit rates, the spending looks justified. If growth cools while the bills stay high, the after-hours reaction was an early warning.
