Oracle's $553 Billion Order Backlog Masks a $300 Billion OpenAI Dilemma

Oracle's record $553B order backlog, fueled by an OpenAI cloud deal, masks a 51% stock plunge, $50B capex, and rising debt risks.

Oracle finds itself in an unusual position: its order book has never been fuller, yet its stock has rarely been cheaper. The software giant reported a record $553 billion in remaining performance obligations (RPO) for its fiscal third quarter, a staggering 325% surge from a year earlier. But rather than celebrating, investors have been heading for the exits, sending shares down roughly 51% from their September peak.

The disconnect stems from a single, enormous bet. Roughly $300 billion of that backlog is tied to a cloud computing deal with OpenAI, the ChatGPT developer that has missed both its 2025 revenue targets and user growth projections. That concentration risk has hedge fund managers like George Noble raising red flags about Oracle’s dependence on a client that remains unprofitable.

Going Off the Grid

To service this mountain of AI contracts, Oracle is overhauling how it powers its data centers. Traditional electrical grids have become a bottleneck for the entire industry, so the company is taking matters into its own hands. For its new "Project Jupiter" AI campus in New Mexico, Oracle has scrapped plans for gas turbines and will instead use Bloom Energy fuel cells.

The facility will operate as a self-contained microgrid, with installed capacity reaching up to 2.45 gigawatts. That’s enough juice to run the most demanding AI workloads while reducing the carbon footprint compared to diesel generators. It’s a radical shift for a company that historically relied on third-party infrastructure.

The Cost of Ambition

Building this kind of capacity doesn’t come cheap. Oracle plans to spend $50 billion on capital expenditures this fiscal year alone. That spending spree has pushed long-term debt to approximately $125 billion, and S&P Market Intelligence analysts project net debt could balloon to $176 billion by 2029. Credit default swap markets are already pricing in higher risk on Oracle bonds.

The financial strain has triggered legal trouble. A class-action lawsuit accuses management of securities fraud, alleging they concealed the scale of cost overruns. To make matters worse, financier Blue Owl Capital has pulled out of a major data center project, leaving Oracle to shoulder more of the burden itself.

Growth That Can’t Be Ignored

Yet beneath the debt drama, the business is firing on all cylinders. Total revenue rose 22% in the March quarter to $17.19 billion. Cloud infrastructure (IaaS) revenue jumped 84% to $4.89 billion, while multicloud database revenue skyrocketed 531%. Cloud now accounts for more than half of Oracle’s total sales, and the net margin held steady at 25.3% despite the heavy investment.

The stock currently trades at around €138, with an RSI of 27.5 signaling deeply oversold conditions. Wall Street remains broadly bullish: 35 of 46 analysts rate the shares a buy, with an average price target near $260. Wedbush’s Daniel Ives maintains an "Outperform" rating and a $225 target, calling the selloff overdone.

For the fiscal fourth quarter, Oracle expects adjusted earnings per share between $1.96 and $2.00. The company has said it has no plans to issue new bonds in 2026, suggesting management believes the worst of the capital spending is behind it. The question is whether OpenAI’s growth trajectory will catch up to Oracle’s ambitions before the debt burden catches up to the stock.