Oracle Backlog Grows

last updated on

Oracle Backlog Grows

Should You Buy Oracle Stock As Backlog Grows?

The backlog of Oracle is now sitting at $553 billion. This means the company now has orders worth $553 billion and will need to fulfill them to get that money.

However, the Oracle stock is not doing so well, as it is already down a lot this year. Its safe to say that Oracle stock has been going through a massive selling pressure and is now trading way below its 52-week high.

Oracle's Backlog Is Now Sitting At $553 Billion

The narrative of the Oracle is mainly driven by two forces. The first one is the massive backlog of Oracle, which continues to grow due to AI demand. Another one is that Oracle needs $50 billion for its capital expenditures, as that's the only way to build data centers and collect the revenue.

But this doesn't mean everything is going wrong for the Oracle. The revenue during Q3 was up by 22% y/y and reached $17.2 billion. Also, analysts have forecasted that this momentum in revenue will continue to stay strong in 2027 as well.

The Oracle share price reveals it is trading at a P/E ratio of 28, which is expected to move higher in the near future.

The only problem Oracle is facing right now is the execution. The company needs a lot of money to convert its backlog into revenue.

Also, spending so much money on capital expenditures means the free cash flow has now started to shrink at an alarming rate. In the long run, this will also effect the Oracle's operating margins. According to analysts, Oracle will need $39 billion in cash to fund the build-out of new infrastructure.

With all things considered, it is a no-brainer to buy the Oracle stock as the valuation looks very attractive. Also, the massive backlog means the future revenue growth is predictable.

But we must also understand that the AI landscape continues to change, and this creates a certain degree of uncertainty. So, investors must also keep that uncertainty in mind when buying the Oracle stock.

Trending Stories