Oracle's Earnings Day: The $638 Billion Question That Divides Wall Street
Published on 09/09/2026 at 13:22 | Editorial boerse-global.de
Thursday's after-hours report will test whether Oracle's staggering backlog can silence the skeptics who see a balance sheet straining under the weight of its own ambition.
The numbers tell a story of two companies. One has secured a $638 billion backlog of contracted but unbilled work — a 363 percent surge year over year that now eclipses Microsoft's comparable cloud commitments of roughly $627 billion and Alphabet's $460 billion. The other burned through $23.7 billion in negative free cash flow last fiscal year, carries $218.7 billion in debt, and has seen S&P cut its credit rating to BBB-.
The share price has been caught in the crosscurrents. After closing Tuesday at €139.88 in Frankfurt, up 0.9 percent on the day and 11 percent for the week, the stock has clawed back much of its recent losses. It sits just 3 percent below its 200-day moving average — a technical signal that the months-long downtrend may be stabilizing. Yet the scars remain: the equity is still down 16 percent on the year and trades more than half below its 52-week high of €294.85.
The OpenAI Engine
The catalyst for the recent rally is unmistakable. OpenAI's launch of its GPT-6 Astra model has reignited enthusiasm for the companies powering the AI boom, and Oracle sits at the center of that infrastructure buildout through a five-year, $300 billion computing capacity deal with the ChatGPT maker. Morningstar analyst Luke Young points to Astra's strong benchmark results as validation of the confidence embedded in Oracle's order book.
OpenAI reportedly accounts for more than half of that towering RPO figure — a concentration risk that cuts both ways. A single customer's shifting fortunes could move Oracle's entire narrative.
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The company's restructuring tells a similar story of transformation. Oracle has quietly trimmed its workforce from 162,000 to 141,000 employees, cutting roughly 21,000 positions, even as it ramps capital expenditures to $55.7 billion — a 162 percent increase. For the current fiscal year, spending is expected to approach $70 billion. The layoffs read less as distress and more as reallocation: away from legacy software structures and toward cloud data centers and AI partnerships.
Bulls, Bears, and the Financing Gap
Wall Street's conviction is unusually fractured. Guggenheim's John DiFucci calls Oracle his "Best Idea" with a $400 price target, projecting cloud services growth of 57 to 63 percent in constant currency and new IaaS bookings above $9 billion in the quarter alone. Citi sees $330, Mizuho $320, and Morgan Stanley recently lifted its target to $210, citing cloud infrastructure growth that hit 93 percent last quarter. At the other extreme, CLSA maintains a Hold with a modest $145 target.
The consensus sits at Strong Buy — 27 buy ratings against four holds — with Morgan Stanley's Sanjit Singh describing an "attractive tactical setup" and expecting cloud revenue growth of up to 63 percent in the August quarter.
The bear case, however, is not about demand. It's about the bill. Oracle reportedly plans a $20 billion equity offering as the primary near-term balance sheet burden, with an additional $40 billion expected over the course of the fiscal year. Guggenheim estimates financing needs could reach $40 billion for 2027 alone. The company is effectively borrowing against its AI future in a market where Jefferies' Christopher Wood has warned of capital destruction from overheated hyperscaler investment.
A Broader Debt Phenomenon
Oracle is hardly alone in this predicament. Meta, Amazon, and Alphabet have all tapped bond markets to fund AI infrastructure. US investment-grade issuance hit a record $130 billion to $145 billion in August, yet the weeks following Labor Day have shown the weakest issuance volumes in six years, according to market observers. Total US debt has just crossed the $40 trillion threshold, while data center spending across the economy is projected at roughly $800 billion for 2026 and is expected to breach the trillion-dollar mark in 2027.
The question of who ultimately absorbs this capital demand will only grow more pressing.
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Adding another layer of complexity, the EU competition authority has reportedly begun informally examining Oracle's licensing practices — no formal proceedings yet, but a reminder that SAP avoided a penalty in July only through commitments to Brussels.
What Thursday's Numbers Must Deliver
For the fiscal first quarter, analysts expect revenue of $19.1 billion, up 28 percent, with earnings per share of $1.74. Options markets are pricing a move of roughly 11 percent in either direction — a measure of how much hangs on this single evening.
The stock's 50 percent annualized volatility reflects a market unsure how to weigh the competing narratives. The bulls see an order book that validates the AI thesis and a position at the heart of the most sought-after models. The bears see a company financing its ambitions with borrowed money, its credit downgraded, and a cash flow statement deep in negative territory.
What makes Thursday's report so pivotal is that both stories can be true simultaneously. The question is which one the numbers will amplify — and whether the market's renewed appetite for Oracle's cloud story can withstand the scrutiny of its balance sheet arithmetic.
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