Oracle Corp (NYSE:ORCL, ETR:ORC) shares surged more than 14% to a record high of $201.72 on Thursday, as analysts praised the software giant’s accelerating cloud growth and massive deal backlog, despite concerns over rising capital expenditures and margin pressure.
Oracle reported 11% revenue growth for the fourth quarter, up from 8% the previous quarter, and lifted its full-year 2026 revenue growth guidance to 16%. Perhaps most notably, the company projected a 100% increase in remaining performance obligations (RPO), or backlog, to more than $275 billion — a figure UBS called “extraordinary” and one that “implies more backlog dollar growth than Microsoft is likely to post.”
UBS analysts said the stock’s rally is justified by “bullish demand signals,” even if the company's free cash flow outlook deteriorated.
“We conclude that it will [outweigh margin erosion] and that the after-hours rally will get bought (not sold),” analysts wrote.
The backlog surge caught attention across Wall Street. Jefferies analysts called it a signal of “Cloud upside in FY26,” adding that “massive RPO guide… bolsters confidence in continued OCI revenue growth.” Oracle’s infrastructure-as-a-service (IaaS) revenue is expected to grow more than 70% in FY26, up from 51% last year, while total cloud revenue is guided to rise more than 40%, according to Jefferies.
Both firms acknowledged pressure on margins and free cash flow due to Oracle’s aggressive cloud infrastructure buildout. UBS cut its operating margin estimate by about 100 basis points, while Jefferies flagged a sharp increase in capital expenditures, noting that FY25 capex came in at $21.2 billion — more than $5 billion above Oracle’s previous guidance. Oracle now expects capex to reach $25 billion in FY26.
Despite the expense concerns, both firms believe Oracle’s momentum justifies the valuation. Jefferies noted that “strong backlog momentum and positive long-term guidance have supported the stock’s re-rating,” adding that the current 32x CY26 GAAP EPS multiple “could expand further as backlog growth begins to translate into revenue.”
UBS echoed that view, writing that “given the pending growth acceleration and ramp of the OpenAI relationship, we raise our CY26E PE multiple to ~32x (from ~29x), a premium relative to peers we believe is warranted.”
Both UBS and Jefferies maintain Buy ratings on the stock, with respective price targets of $225 and $220.