Oracle Q4 Preview: Can $130B Backlog Power a Cloud Comeback?

Oracle is set to report its fiscal Q4 earnings on Wednesday after the close, with investors eager to see if the software giant can deliver on its bullish AI-fueled narrative. Analysts are looking for Oracle's adjusted earnings to increase 1% to $1.64 per share. Sales are seen rising 9% to $15.6 billion for the May-ended quarter.

Analysts polled by FactSet are looking for Oracle's adjusted earnings to increase 1% to $1.64 per share. Sales are seen rising 9% to $15.6 billion for the May-ended quarter.The company’s fiscal Q3 results were a mixed bag: revenue of $14.13 billion fell short of the $14.39 billion consensus, while adjusted EPS of $1.47 also missed the $1.49 estimate. However, the headline numbers belied significant strength in the company’s cloud operations, particularly in Infrastructure-as-a-Service (IaaS), which grew 49% year-over-year. Most notably, Oracle posted a record-setting $33 billion increase in Remaining Performance Obligations (RPO), lifting the total to $130 billion—a 62% jump versus the prior year. That surge in backlog has underpinned investor confidence in Oracle’s ability to accelerate revenue growth as supply constraints ease and AI demand scales.

Watch: Longtime Oracle watcher Angelo Zino of CFRA weighs in on earnings expectations.

Guidance for Q4 sets a cautious tone. Management projected non-GAAP EPS between $1.61 and $1.65, well below the then-$1.79 consensus. Total cloud revenue growth was guided at 25%–27%, trailing analysts’ ~34% expectations, with foreign exchange headwinds cited as a factor. CapEx was also raised to $16 billion, up from a prior $14 billion estimate, as Oracle continues its aggressive AI infrastructure buildout. Among the biggest headlines last quarter was Oracle’s multi-billion-dollar contract with AMD to supply 30,000 MI355X GPUs, a deal that underscores the company’s efforts to compete with hyperscalers. Analysts will also be looking for updates on “Project Stargate,” a still-murky initiative seen as a potential multi-quarter catalyst with implications for the RPO line and long-term AI strategy.

Heading into Q4, investors will be laser-focused on several key areas: the pace of Oracle Cloud Infrastructure (OCI) revenue growth, any updates on capacity constraints and whether they’re beginning to ease, the trajectory of margins under a CapEx-heavy model, and Oracle’s ability to convert its massive RPO into recognized revenue. Piper Sandler, while acknowledging the long-term AI opportunity, lowered its price target to reflect near-term headwinds and lingering skepticism over Oracle's ability to consistently deliver upside surprises. Similarly, BMO Capital raised its price target to $200 but flagged lower operating margin expectations in FY26 and FY27 due to increased depreciation tied to data center investments. Still, the firm believes Oracle can deliver double-digit operating income growth, assuming revenue acceleration holds.

KeyBanc and Citizens remain constructive, both praising the Q3 bookings momentum and improved visibility. KeyBanc noted that the $33 billion RPO increase was larger than any six-month period in Oracle’s history and anticipates further AI-related tailwinds as Oracle expands its Texas and Salt Lake City data centers. Mizuho echoed this optimism after visiting the Salt Lake City facility, arguing that Oracle has effectively mastered the AI supercluster playbook and is poised to replicate its buildout success across additional regions. They view the current valuation—around 23x forward earnings—as compelling given the scale of the AI monetization opportunity. Notably, Mizuho sees sustainable double-digit revenue growth and operating margins above 40% as achievable over the midterm.

CFRA analyst Angelo Zino, a long-time Oracle watcher, remains bullish heading into earnings. “This is a company benefiting from a massive inflection on the compute side,” Zino said. “We’re looking for about 9% top-line growth this quarter, and we believe that growth could accelerate into FY26 and FY27.” He added that supply constraints appear to be easing and that momentum in the OCI business, now roughly 20% of revenue, should help drive a more favorable business mix. Zino expects continued RPO expansion and says any short-term revenue miss shouldn’t derail the longer-term bull case. “They’ve missed six of the last seven quarters on the top line, but the Street has largely looked through that because of the long-term visibility,” he noted.

Oracle stock has traded sideways in recent months after a sharp rally earlier this year, with many analysts calling the current valuation “fair but not cheap.” The stock remains below some of the most bullish price targets ($200+ from Deutsche Bank and BMO), with others like JPMorgan and Stifel holding more neutral stances. The recent 25% dividend increase and ongoing buybacks help support total return, but elevated CapEx and debt levels remain watchpoints.

Ultimately, Oracle heads into its Q4 report with a unique mix of expectations and skepticism. The RPO surge and AI narrative provide plenty of upside optionality, but actual execution on revenue growth and margins will be critical to validating the bull case. If Oracle can show traction in backlog conversion while demonstrating margin stability and progress on Stargate, it could reignite confidence in its long-term transformation from legacy database giant to cloud and AI powerhouse.