Oracle Near Multi-Year Lows: The $638 Billion Backlog Now Depends on a Gas Pipeline

Key Stats for Oracle Stock

• Current Price: $142.45
• Target Price (Mid): ~$488
• Street Target: ~$246
• Potential Total Return: ~243%
• Annualized IRR: ~30% / year

Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free) >>>

What Happened?

Oracle Corporation (ORCL) just closed the best fiscal year in its history, and its stock trades at $142.45, almost 59% below the $345.72 high it set in September 2025. The peak-to-trough decline was steeper still, reaching nearly 65% at the July low. If investors searched why a company growing cloud infrastructure revenue 93% sits near multi-year lows, the plain answer is that Oracle is burning cash to build AI data centers, its credit rating was cut in July to one notch above junk, and in mid-August, a gas pipeline that a supplier is building to power one of Oracle’s planned sites slipped six months.

Oracle has sold a record $638 billion of future work, so the fear is no longer whether the demand is real. It is whether Oracle can secure the power and energize its sites fast enough to convert that backlog into cash before the debt raised to build it comes due.

The Number That Broke the Bull Case Is Free Cash Flow

For two decades, Oracle was a slow, dependable compounder valued on earnings and its dividend. That company is gone. In fiscal 2026, revenue crossed $67 billion for the first time, up 17%, cloud infrastructure grew 93% in the fourth quarter, and operating cash flow reached $32 billion, up 54%.

Capital expenditures reached $55.7 billion for the year, above guidance, and with operating cash flow at $32 billion, free cash flow landed at around negative $23.7 billion per TIKR data. On a net cash basis, which strips out roughly $8 billion of customer prepayments and timing, the capital outlay was about $48 billion, still far above what the business generated. For fiscal 2027, CFO Hilary Maxson guided to around $70 billion in net cash capex and told investors Oracle expects to raise around $40 billion in debt and equity to fund it. A company already carrying a 4.07x net-debt-to-EBITDA ratio is about to borrow heavily against a build it has not finished. S&P Global Ratings cut Oracle to BBB- in July, and Moody’s warned that no other hyperscaler is investing this aggressively with cash flow this stretched.

See historical and forward estimates for Oracle stock (It’s free!) >>>

A New Mexico Pipeline Is Now Part of the Thesis

Project Jupiter, a planned 2.5-gigawatt data center in Doña Ana County, New Mexico, is one of the most important sites in Oracle’s Stargate contract to host AI infrastructure for OpenAI, designed to run on Bloom Energy fuel cells fed by a supplier’s pipeline called the Green Chile Project. 

On August 14, Energy Transfer’s Transwestern subsidiary told federal regulators the pipeline’s in-service date had moved from August 15, 2026, to February 1, 2027, after New Mexico’s State Land Office twice refused the route. Oracle shares fell around 3.6% that day. Oracle says the project remains on schedule, and this is a supplier’s regulatory setback rather than a cancellation, but one gas analyst at Energy Aspects told Bloomberg that even the February date is “probably not realistic.”

On the Q4 call, co-CEO Clay Magouyrk said Oracle delivered more than 1.2 gigawatts to customers in fiscal 2026 and that first-quarter fiscal 2027 delivery was “approaching 1 gigawatt, nearly the same capacity as we’ve delivered in the previous 4 quarters combined.” That acceleration is the engine that converts backlog into revenue, and a supplier’s pipeline slipping six months is a checkable example of what can jam it: power and permitting, not chips or customers. Maxson framed the stakes plainly, telling analysts the infrastructure business earns a return on invested capital “in the high 20s at a steady state” once projects ramp.

What the Backlog Is Worth Depends on Renewals

Global GPU utilization ran at 97.5%, and when 35,000 GPUs from 59 customers came up for renewal, the capacity not renewed was mostly resold to others in the same quarter. This is real consumption. Multicloud database revenue grew 404% year over year, diversifying Oracle toward thousands of enterprises running its databases across AWS, Azure, and Google, the healthier and higher-margin growth.

Against it sits concentration: a large share of the AI backlog traces to a few hyperscale accounts, and Magouyrk was candid that Oracle “can’t say” how the mix of prepaid, bring-your-own-hardware, and Oracle-financed deals will evolve. The discount, meanwhile, is real. Oracle trades at 11.03x NTM EV/EBITDA, below Microsoft at 15.30x and ServiceNow at 19.59x, and near Salesforce at 11.69x, per TIKR’s Competitors page.

See how Oracle performs against its peers in TIKR (It’s free!) >>>

TIKR Advanced Model Analysis

• Current Price: $142.45
• Target Price (Mid): ~$488
• Potential Total Return: ~243%
• Annualized IRR: ~30% / year

See analysts’ growth forecasts and price targets for Oracle stock (It’s free!) >>>

Using TIKR’s mid-case scenario, realized at May 31, 2031, the model targets around $488, implying roughly 243% total upside and an annualized return near 30% per year. The two revenue drivers behind that number are OCI infrastructure consumption, as delivered gigawatts convert into recognized revenue, and multicloud database attach rates, where Oracle databases running on rival clouds keep compounding. The margin driver is infrastructure gross margin recovering toward the 30% to 40% range Magouyrk targeted, as ramped data centers reach full contractual revenue.

The primary risk is execution and funding. If power, permitting, or pipelines push delivery to the right, revenue recognition slips, free cash flow stays negative longer, and another downgrade becomes possible. Upside: Oracle energizes its sites near schedule, the backlog converts, and the stock re-rates from a distressed multiple to a growth one. Downside: the funding gap and a delayed ramp keep the multiple compressed while debt climbs, leaving even a growing business trading sideways.

Conclusion

The next real test is Oracle’s first-quarter fiscal 2027 report, expected around September 10. Management guided to 27% to 29% total revenue growth and 58% to 64% cloud growth, the fastest of this cycle. Good looks like cloud growth landing at or above that range with the cash burn narrowing and the BBB- rating intact. Bad looks like any softening in delivered gigawatts or a wider burn, which would signal the pipeline delay was a preview rather than an exception. Watch the gigawatts delivered and the funding language as closely as the headline EPS. That is the number that decides whether the backlog is an asset or an anchor.

See what stocks billionaire investors are buying so you can follow the smart money with TIKR.

Should You Invest in Oracle?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up Oracle, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track Oracle alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

Analyze Oracle on TIKR Free →

Looking for New Opportunities?

Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!