Wall Street Is Wrong About Oracle -- This $553 Billion Backlog Tells a Different Story for 2026
Key Points
Oracle's stock price has fallen more than 50% in just six months.
The company's massive backlog suggests the future could still be very bright.
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Wall Street is clearly flashing warning signs about technology giant Oracle (NYSE: ORCL). The stock has lost more than half of its value in just six months. And yet, the company's fiscal third quarter 2026 earnings highlighted a massive backlog of $553 billion. Here's why more aggressive investors may want to stay positive about Oracle's future.
Oracle has a lot of work to do
Oracle is helping to build out the infrastructure needed to support artificial intelligence (AI). Much of the $553 billion backlog (which the company calls remaining performance obligations) relates to the construction of data centers that house AI computers. These aren't optional assets; AI has to live somewhere.
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Oracle has positioned itself as a vital "picks-and-shovels" provider to the companies that want to use AI. In fact, the company's backlog was up 325% year over year, showing the immense demand for AI infrastructure. Demand for AI infrastructure is so strong that management expects "to comfortably meet and likely exceed our revenue growth rate forecast for FY27 and beyond."
Wall Street's deeply negative view of Oracle stock doesn't line up with that outlook, noting that the company's adjusted earnings rose 21% year over year in the fiscal third quarter.
There are risks to consider with Oracle
If everything works out as well as Oracle hopes, it is highly likely that Wall Street's negative view of the stock is dead wrong. And the massive $553 billion backlog hints at this. If you are an aggressive investor, it might be worth digging into Oracle's growth story.
The problem with this technology company's story lies in its balance sheet. That's where you will notice that Oracle's debt load has increased dramatically, with long-term debt rising by nearly 50% in less than a year. Management is very clear that building data centers requires huge upfront costs. That said, the company also appears aware of the issue, because it is adjusting its approach to include more pre-funding from customers. If customers start canceling orders for any reason, however, Oracle's material levels of debt could become a worrying headwind.
In the end, Oracle is clearly making a sizable bet on AI infrastructure. Only more aggressive investors should buy the stock. However, if you believe that AI is a technology that will change the world, the sell-off in Oracle's stock could be your entry point into a well-respected AI "picks-and-shovels" play in 2026.
Should you buy stock in Oracle right now?
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.
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