Oracle's $638 Billion Backlog Can't Mask the Strain of a $90 Billion Infrastructure Bet
Published on 07/19/2026 at 16:42 | Redaktion boerse-global.de
Oracle’s share price has shed roughly a third of its value in recent weeks, even as the company sits on a record order book worth $638 billion. The disconnect is stark — but the explanation lies not in demand, but in the immense cost of building the infrastructure needed to fulfill it. The software giant is remaking itself into a construction company for the AI age, and the credit markets are starting to balk at the price tag.
The scale of the spending is breathtaking. Oracle burned through $55.7 billion in capital expenditures during fiscal 2026, up from $21.2 billion the year before. For the current fiscal year, the company intends to spend between $90 billion and $95 billion, much of it directed toward the "Stargate" mega-facility in Texas and other sites in Wisconsin. The transformation has already pushed free cash flow to negative $23.7 billion and hoisted total debt above $130 billion.
Rating agency S&P Global took notice, downgrading Oracle to BBB- on July 9 — just one notch above junk territory. The agency cited a "persistent underestimation" of capital outlays by management. Days later, on July 19, the cost of insuring Oracle’s debt against default hit a record high, with credit default swaps climbing to levels not seen in years. Reports have also emerged that even large banks such as JPMorgan Chase are struggling to syndicate the multibillion-dollar loans needed for the AI build-out, as individual lenders bump against internal risk limits.
Specific projects have added to the anxiety. The $16.5 billion data center in New Mexico was forced to swap natural gas for fuel-cell technology after environmental challenges, triggering cost overruns said to run into the billions. A separate facility in Wisconsin faces more than $100 million in extra expenses tied to transmission costs and rating-related requirements. The Information has flagged further billion-dollar surprises at other Oracle data centers, though the details remain undisclosed. Meanwhile, the company trimmed its workforce by 13% to 141,000 employees, booking $1.8 billion in restructuring charges.
Should investors sell immediately? Or is it worth buying Oracle?
Institutional investors are split on how to play the uncertainty. Jennison Associates cut its stake by 26.3% in the first quarter, selling 2.48 million shares, though it still holds a position worth roughly $1.02 billion. Assetmark shed 43.6% of its holdings, and Kinsale Capital Group reduced by 39%. On the other side, Copeland Capital Management entered with a $4.56 million position, while SEB Asset Management added 382,268 shares worth about $56.24 million. Vice Chairman Jeffrey Henley sold 400,000 shares on June 24 under a prearranged trading plan at $159.16 each.
The technical picture for the equity is equally challenging. After closing at €110.56 on Friday — a modest 1.79% gain that did little to reverse the broader slide — the stock sits just 5.20% above its 52-week low of €105.10, set on July 17. The 14-day relative strength index of 29.0 points to oversold conditions, a level that historically can precede a bounce but also reflects deep pessimism about the company’s near-term liquidity.
Analyst consensus still rates Oracle as a buy, with a median price target of $268.27, implying roughly 130% upside from current levels. Simply Wall St pegs fair value at $242.10. Yet those targets rest on the assumption that Oracle can resolve its financing constraints. The company itself has laid out an ambitious roadmap targeting revenue of $171.1 billion and profit of $36.6 billion by fiscal 2029 — a compound annual growth rate of nearly 38.7%.
Oracle at a turning point? This analysis reveals what investors need to know now.
For now, the action is not on the equity screen but in the bond market. Every successful loan syndication or bond issuance will move the stock more than any software contract. The next tangible event for shareholders is the quarterly dividend of $0.50 per share, payable on July 24. That is small comfort. The real question remains whether Oracle can convert its record backlog into cash quickly enough to service a debt load that is growing by the quarter. Until then, the market is pricing in a simple truth: a massive order book is no guarantee of calm seas.
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