Oracle's $664B backlog is real, but free cash flow is negative $23.7B
pdamodaran · x · 2026-10-29
A DalalBytes investment report scores Oracle (ORCL) 62/100, Selective Positive, at a reference price of $130.53 (Oct 27, 2026) and $395B market cap.
Key numbers:
- Cloud infrastructure revenue up 121% YoY in Q1 FY2027, fastest among big clouds
- RPO backlog of $664B after a $209B one-year jump; OpenAI drives over half of it per one bank estimate
- FY2026 free cash flow was negative $23.7B; borrowings of $125.3B vs $36.4B cash
- Credit rating BBB-, one notch above junk; management capped new funding at $20B more through FY2030 at the Oct 28 investor day
- Stock trades 60% below its September 2025 record close
- FY2029 targets: $102 bear / $230 base / $330 bull
The verdict: growth and the database moat are real, but the debt-funded expansion carries genuine financing risk — and the price already embeds more fear than the filings support.
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