June 11, 2026
Oracle Beat Earnings and Still Got Punished
The numbers were good. The reaction was worse. Here is what to watch next.
First a note from InvestorPlace
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Senior Investment Analyst, InvestorPlace
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Oracle Beat Earnings and Still Got Punished
Hey there, bargain hunter.
Oracle reported Q4 FY2026 results on June 10 and beat on every number that matters. Revenue came in at $19.2 billion, up 21% year-over-year, ahead of the $19.1 billion consensus. Non-GAAP EPS printed at $2.11 versus the $1.96 estimate. IaaS revenue grew 93%. The remaining performance obligation backlog hit $638 billion, up 363% year-over-year, adding $85 billion in a single quarter. By almost any traditional read, this was a clean quarter.
The stock dropped 7% to 11% overnight.
That gap between result and reaction is the whole story right now.
What spooked the market was not the quarter. It was what comes next. Oracle announced plans to raise $40 billion in debt and equity during FY2027. That sits on top of $70 billion in guided net capex for the year, plus another $20 to $25 billion in component prepayments. At the top end, total capital outlay could approach $95 billion. Oracle is guiding for roughly $90 billion in revenue for that same year. Do the math. The company may spend more than it earns just to build capacity. That is a bet, not a business plan in the traditional sense, and the market is still deciding how it feels about it.
And they have done this before. In FY2026, Oracle raised $43 billion in debt and $5 billion in equity. FY2026 capex came in at $55.7 billion, above their own $50 billion projection. The scale keeps growing. That is either a signal of enormous conviction or a warning sign depending on which side of the trade you sit on.
Trump to Unleash Giant $2.7 Trillion Gold Mine?
Executive Order #14153 outlines what Jim Rickards believes are Trump’s intentions to unleash the largest mineral reserve in the country.
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Slight tangent, but it is worth pausing on: Oracle CEO Clay Magouyrk said on the call that Oracle plans to bring nearly one gigawatt of computing capacity online in the current quarter alone. That is roughly equivalent to everything deployed across all of FY2026, compressed into three months. The build rate is not just accelerating – it is restructuring what this company looks like at its core.
The part people skip when they look at the backlog is the composition of it. Most of the incremental RPO growth in Q3 and Q4 came from large AI contracts where customers either prepaid Oracle for GPU purchases or provided the hardware themselves and handed it over. That customer-funded model has accumulated $75 billion in cumulative investment, which meaningfully offsets Oracle’s own financing burden. Bank of America flagged that more than 50% of the RPO comes from a single counterparty: OpenAI. That number alone should change how you think about the backlog. It is not diversified demand. It is one enormous relationship.
Concentration risk is real. So is the opportunity. Both things are true.
On valuation: at roughly $192 per share, ORCL trades around 26 times forward non-GAAP earnings, based on FY2027 EPS guidance of $8.05. For a company with 93% infrastructure growth and $638 billion in contracted future revenue, that multiple is arguably not stretched. The problem is the balance sheet. Debt-to-equity is running near 366%. That is elevated by any measure, and it is the variable that turns from manageable to painful the moment revenue conversion slows or rates stay high longer than expected.
What matters is whether the backlog converts. Not the headline RPO number – the actual recognized revenue flowing through each quarter. That is the only metric worth tracking right now. Everything else is noise.
Deadline Tomorrow
When SpaceX goes public, it could hit a $1.75 TRILLION valuation – that would be 3,000 times bigger than Amazon’s IPO.
Most investors will be locked out until AFTER the big announcement.
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I’m revealing the ticker for free.
Here is where I am at on this one. If you already hold ORCL, the business is executing and the fundamentals have not deteriorated. Trimming here is only worth it if the position is too large for your comfort with a heavily leveraged hyperscaler. If you are looking at it fresh, the $175 to $180 range is where the forward multiple compresses enough to make a staged entry more defensible. First tranche there, second tranche only if the Q1 FY2027 report – due around September 10 – shows backlog converting into recognized revenue at a meaningful clip.
Oracle is spending like the demand is real. Every data point in this quarter says it is. The open question is timing – whether the market prices the growth before the debt load becomes the loudest number in the room.
That answer will show up in the revenue line before it shows up anywhere else. Keep watching it.
