Tech Compression Dragged Oracle Stock to $175, but Its Unbelievable $638 Billion AI Backlog Makes It an Automatic Buy

Oracle (NYSE:ORCL) astatine $175 looks compelling connected the data. The banal has been pulled into the broader bundle compression commercialized adjacent arsenic its Q4 study revealed a $638 cardinal AI backlog that locks successful years of guardant revenue.

Oracle sells database software, endeavor applications specified arsenic Fusion and NetSuite, and Oracle Cloud Infrastructure (OCI), which has emerged arsenic a superior hyperscaler challenger by winning large-scale AI grooming and inferencing contracts. The banal has compressed from a 52-week precocious of $343.01, dragged down with peers arsenic investors interest that AI agents volition erode accepted bundle subscriptions and that Oracle's superior strength volition outrun its net power.

The $638 Billion Reason This Pullback Looks Like a Gift

Q4 was a watershed. Cloud Infrastructure gross grew 93% twelvemonth implicit twelvemonth to $5.79 billion, full unreality reached 52% of sales, and Remaining Performance Obligations jumped 363% to $638 billion, with $75 cardinal backed by customer-supplied oregon prepaid GPUs that trim Oracle's superior burden.

Management confirmed FY2027 gross astatine $90 cardinal and raised non-GAAP EPS guidance to $8.05, with Q1 unreality maturation guided to 58% to 64%. Mizuho reiterated Outperform with a $320 terms target, calling the FY27 usher conservative.

The Capex Trap Bears Are Pricing In

FY26 escaped currency travel came successful astatine antagonistic $23.69 cardinal against $55.66 cardinal of capex, and absorption plans to rise astir $40 cardinal much successful indebtedness and equity successful FY27 connected apical of $218.7 cardinal successful full liabilities.

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Oracle disclosed a 21,000 worker reduction, astir 13% of the workforce, with $1.84 cardinal successful severance costs. Software licence gross fell 2% successful Q4, feeding the carnivore thesis that the bequest publication is eroding faster than unreality tin offset, with attraction hazard successful a fistful of mega AI contracts.