Oracle's Backlog Now Sits at $553 Billion. Is the Stock a Buy?

By Daniel Sparks – Mar 10, 2026 at 11:33PM ESTKey PointsOracle's third-quarter cloud infrastructure revenue surged 84% year over year, accelerating significantly.The software giant's remaining performance obligations climbed to a staggering $553 billion.The tech stock's valuation looks reasonable given its growth. But massive infrastructure investments are increasing the stock's risk profile.It's been a brutal start to 2026 for Oracle (ORCL 1.43%) investors. Down about 23% year to date and sitting near $149 per share just before its fiscal third-quarter earnings report, the tech stock had taken a massive beating. And its pullback from its 52-week high is even bigger. The company's narrative has been dominated by two opposing forces. On one hand, Oracle boasts a massive backlog driven by unprecedented demand for artificial intelligence (AI) computing. On the other hand, the company faces a staggering $50 billion in expected capital expenditures in fiscal 2026 to build out the data centers required to begin delivering on its contracts. So, is this apparent headwind of massive spending actually a problem if it's funding explosive growth, or should investors stay on the sidelines? Following the company's strong fiscal third-quarter update on Tuesday afternoon, let's take a closer look at the business to see if shares are a buy. Image source: Getty Images. Accelerating cloud infrastructure growth Oracle's third-quarter results showed the company executing. The tech company's fiscal third-quarter revenue rose 22% year over year to $17.2 billion. And this momentum is expected to persist. Management raised its fiscal 2027 revenue guidance to $90 billion. This top-line performance represents a notable milestone for the legacy database giant. As Oracle chief financial officer Doug Kehring explained in the company's earnings call, the period marked "the first quarter in over 15 years where both organic total revenue and organic non-GAAP [earnings per share] grew at 20% or better..." Driving this success, of course, is Oracle's cloud infrastructure business. The company's cloud infrastructure revenue surged 84% year over year to $4.89 billion during the quarter -- a sharp acceleration from the segment's 68% growth rate in fiscal Q2. Fueling this growth is an enormous pipeline of contracted demand. Oracle's remaining performance obligations (RPO), a metric that represents the value of contracts signed but not yet recognized as revenue, climbed to $553 billion. This key metric is up an incredible 325% year over year and up $29 billion sequentially. The sequential increase, management said, was driven by large-scale AI contracts. ExpandNYSE: ORCLOracleToday's Change(-1.43%) $-2.16Current Price$149.40Key Data PointsMarket Cap$429BDay's Range$148.45 - $154.1452wk Range$118.86 - $345.72Volume52MAvg Vol29MGross Margin65.40%Dividend Yield1.34% Weighing the spending against the valuation With shares trading at about 28 times earnings as of this writing, investors clearly expect the company to continue growing rapidly. Of course, its backlog makes predicting continued strong growth quite easy. Still, execution will be the hard part. Over time, Oracle must seamlessly convert its more than half-a-trillion-dollar backlog into recognized revenue while managing an incredibly capital-intensive expansion. Management guided for $50 billion in capital expenditures in fiscal 2026. While necessary to secure market share in the AI race, this massive investment cycle is severely pressuring free cash flow. And these upfront costs will increasingly show up as depreciation, weighing on the company's operating margin. To fund this build-out, Oracle ended the recent period with about $39 billion in cash and marketable securities on its balance sheet. This cash hoard, alongside the company's $23.5 billion in trailing-12-month operating cash flow, gives it significant financial firepower, but the scale of the required data center investments remains daunting. Ultimately, Oracle stock arguably looks attractive today given its reasonable valuation relative to its astounding backlog and accelerating infrastructure growth. But the fast-changing nature of the AI hardware landscape and the sheer size of the company's capital commitments mean this investment carries significant uncertainty. Investors interested in the stock, therefore, should view it as high risk, and those who do buy shares may want to consider keeping positions relatively small as a percentage of their overall portfolio.Read NextMar 10, 2026 •By Scott LevineWhy Oracle Stock Is Ripping Higher in After-Hours TradingMar 10, 2026 •By Jose NajarroShould Nvidia Stock Investors Be Worried About Latest Oracle and OpenAI Rumors?Mar 9, 2026 •By Scott LevineOwn Oracle Stock? 2 Things Investors Need to Know.Mar 8, 2026 •By Will EbiefungCould Oracle Be a Millionaire-Maker Stock?Mar 3, 2026 •By Lee SamahaHere's Why Oracle Stock Got Hammered Last MonthMar 2, 2026 •By Patrick Sanders4 Software Stocks With 38% to 82% Upside Potential According to Wall StreetAbout the AuthorDaniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”TMFDanielSparksX@sparks_capitalStocks MentionedOracleNYSE: ORCL$149.40(-1.43%)-$2.16*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.