Oracle’s shares gained 3 per cent in early trading yesterday after a $26 billion jump in revenue backlog eased some concerns around its massive debt-driven spending spree, but analysts said the company’s cash flow recovery is still a long way off.
Roughly half of the $664bn in its backlog is expected to convert into sales within the next 36 months and much of its newly contracted revenue will not require its own capital, Oracle said, as it relies on client prepayments and customers’ own chip supply to build out capacity.
That, coupled with upbeatfirst-quarter earnings and an improving balance sheet, helped Oracle shares recover from a spell of underperformance.
The stock has fallen more than 21pc this year through the last close, compared with a nearly 11pc rise in the S&P 500 index, as investors questioned Oracle’s costly AI bets and the viability of its traditional software business in the AI era.
Oracle carries risks around financing and data centre profitability at a time when component costs have surged and broader backlash to data centre development has grown in the US.
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