Oracle's Massive Cloud Infrastructure Backlog Could Drive Strong AI Stock Performance Through 2028
Oracle has reported a significant increase in its remaining performance obligation (RPO), reaching $638 billion, driven by strong demand for cloud infrastructure and artificial intelligence services. This backlog is expected to fuel future revenue growth as Oracle converts these commitments into earnings over the next three years. The company anticipates recognizing nearly $77 billion of this RPO in fiscal 2027 alone, with further acceleration projected through 2029. Oracle's cloud infrastructure revenue surged by 77% to $18.1 billion during its fiscal year ending May 31, contributing to a record annual revenue of $67.4 billion. Despite recent underperformance in the stock market and rising capital expenditures due to AI data center construction, Oracle is taking steps to manage costs through prepayments and customer-owned hardware arrangements. The company's CFO highlighted that these long-term contracts provide strong visibility into future growth and reflect robust demand across its services. Analysts expect continued acceleration in revenue growth as the backlog converts over time.
Tickers: $ORCL