Oracle Reports on June 10, and Its Cloud Backlog Could Be the Next Big Test for the AI Infrastructure Trade

Cloud and database company Oracle (NYSE: ORCL) reports fiscal fourth-quarter results -- covering the period ended May 31 -- after the market close on Wednesday, June 10. And the revenue and earnings headlines may not be what moves the stock. The figure investors will arguably zero in on is Oracle's remaining performance obligations (RPO), or the dollar value of signed contracts not yet recognized as revenue, which has become one of the clearest gauges of how much demand there really is for AI computing.

Even more, this report is timely. AI and chip stocks have sold off over the past week, and Oracle itself slid nearly 10% on June 5. And as of this writing, shares trade near $212 -- well below 52-week highs of more than $345 but up sharply from a low near $150 in February.

It has been a volatile round trip for the stock, and the backlog is a big reason.

Image source: Getty Images.

The backlog that rewrote Oracle's story

A year ago, this key metric barely came up. Oracle's RPO stood at $138 billion when it closed fiscal 2025 last June. But then it exploded -- to $455 billion in the fiscal first quarter, $523 billion in the fiscal second, and $553 billion in the fiscal third quarter it reported in March. Almost all of that growth traces to a small number of enormous AI infrastructure contracts.

The shape of that growth deserves a closer look, though. The bulk of the jump landed in one quarter, with the fiscal first quarter alone adding more than $300 billion, while the sequential gains since have shrunk -- to $68 billion, then $29 billion. The backlog is still climbing, just no longer at last summer's breakneck pace. Whether Oracle signed another mega-deal or two before the year closed on May 31 is exactly the kind of thing Wednesday's report could reveal.

The other half of the story is conversion -- how quickly contracted work turns into revenue. Here, the trend has been encouraging. Cloud infrastructure revenue, the piece that sells raw computing power, grew 52%, then 55%, then 68%, and most recently 84% year over year.

Further, Oracle's total cloud revenue rose 44% last quarter to $8.9 billion, and management has guided for cloud growth to accelerate again in the fiscal fourth quarter.

"Demand for AI infrastructure, both GPU and CPU, continues to exceed supply," said Oracle co-CEO Clay Magouyrk during the company's fiscal third-quarter earnings call, tying that demand directly to the $553 billion backlog.

What a record backlog can't promise

For all the excitement, a backlog this size comes with real caveats -- and this is where the report could disappoint.

First of all, contracted work isn't guaranteed revenue; these are multiyear commitments that convert into sales only gradually, so a figure in the hundreds of billions says more about the next several years than the next few quarters.

Additionally, building the capacity to fulfill this backlog is also enormously expensive. Oracle expects about $50 billion in capital expenditures this fiscal year and has lined up plans to raise up to $50 billion in debt and equity during 2026 -- about $30 billion of it already raised, with $130.9 billion in senior notes and other long-term borrowings outstanding as of Feb. 28.

Finally, because so much of the backlog rides on a handful of very large customers, any wobble in their plans could spook investors. In fact, investors saw exactly this earlier this year, when concerns about a major AI customer's finances sent shares lower.

That combination -- spectacular demand set against heavy spending and customer concentration -- is why valuation matters here. As of this writing, the stock trades at a price-to-earnings ratio of about 38. A valuation like this assumes the company converts its backlog into revenue and earnings at a rapid rate for years to come.

Overall, I believe the June 10 report is largely about whether the AI infrastructure story still has momentum. A backlog that keeps growing, paired with accelerating cloud revenue, suggests the AI build-out is continuing at its seemingly insatiable pace. A backlog that stalls, or margins that slip substantially under the weight of the build-out costs, could hand an already jittery market another reason to sell.

And I think the real story here actually goes far beyond Oracle itself. After a year this turbulent, Oracle's results may set the tone for the broader AI infrastructure trade -- a lot to ask of one number, and exactly why investors (including myself) will be watching it.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.