Major Funds Accumulate Oracle Shares Amid Strategic Pivot

Institutional investors like Vanguard are buying Oracle stock as its AI backlog hits $553B, driving 84% cloud growth despite major restructuring and debt plans.

While Oracle Corporation's stock has shed nearly a quarter of its value since the start of the year, falling to approximately €126.78, a significant shift is occurring beneath the surface. Contrary to the hesitation shown by many retail investors, large institutional asset managers are actively building positions. Recent regulatory filings confirm that major players like Vanguard and BlackRock are strategically increasing their stakes, positioning their portfolios for the company's ambitious transformation into a leading provider of AI infrastructure.

Unprecedented Backlog Fuels Long-Term Confidence

The primary catalyst for this institutional interest is Oracle's record-breaking backlog of remaining performance obligations. This figure, representing future revenue from contracted services, has soared by 325% year-over-year to reach $553 billion. This surge is largely driven by massive contracts for artificial intelligence infrastructure, signaling robust future demand.

This strategic direction is reflected in the latest quarterly results. Oracle reported total revenue of $17.2 billion, with its Cloud Infrastructure (OCI) services standing out, posting remarkable growth of 84%. This performance contributed to a milestone not seen in 15 years: simultaneous growth of over 20% in both organic revenue and adjusted earnings per share.

Costly Ambitions Drive Restructuring

Oracle's vision to become a data center giant requires immense capital investment, prompting severe internal measures. To free up financial resources for constructing new data centers, management is cutting approximately 30,000 positions globally, equating to about 18% of its total workforce. Concurrently, the company plans to raise up to $50 billion in fresh capital through a combination of debt and equity financing.

Despite these moves pushing the company's total debt beyond the $100 billion mark, Oracle remains committed to its shareholder returns. A regular quarterly dividend of $0.50 per share is scheduled for distribution to shareholders on April 24.

Aggressive Targets and Strategic Integration

Looking ahead, management has set an ambitious target of $90 billion in total revenue for the 2027 fiscal year. To achieve this goal and compete effectively against specialized rivals, Oracle is now sharpening its strategic focus. A key initiative involves the direct integration of advanced AI functionalities into its core database products, aiming to solidify its market position and drive the next phase of growth.