Oracle: A Cloud with a Silver Lining…Maybe

Now, I reckon there’s a heap of folks on Wall Street gettin’ all worked up over these “remaining performance obligations” – what they call a “backlog,” but sounds to me like a promise a fella might make after a bit too much cider. Oracle, see, has piled up somethin’ north of $523 billion worth of ’em. Half a trillion! Enough to make a king blush, or at least order a new palace. They’re claimin’ this positions ’em for some grand success in this here AI game. Well, I’ve seen promises before, and a good many of ’em ended up lookin’ like a busted watch – tellin’ the wrong time.

This Oracle, it’s become one of them essential infrastructure providers, like the railroad was back in my day. Servin’ up cloud computin’ and data to all these newfangled tech companies. They’ve got contracts, mind you, for all this future business. But a contract ain’t a gold nugget in yer pocket; it’s just a piece of paper with fancy writin’. Still, it is a sign, if you squint at it just right, that somebody believes they’ll be around to collect when the bill comes due. Though, let me tell ya, fulfillin’ promises is harder than wranglin’ a stubborn mule.

The pile of commitments has swelled somethin’ fierce – near 440% in a year! Mostly thanks to Meta – that Facebook contraption – and Nvidia, makin’ them fancy graphics cards. Seems these fellas are buyin’ a whole lot of Oracle’s cloud services. Revenue’s been climbin’ about 34% a year. Now, that is a respectable clip, even for a fella who’s seen a few horses race.

They’re sayin’ this backlog’ll keep ’em busy for years, and they hauled in $16 billion just last quarter. Oracle’s revenue did grow 14% recently. But here’s a curious thing: the stock’s been driftin’ downward over the last twelve months, down 5%. Folks are gettin’ antsy, I reckon. Now, long-term investors, they’ve done alright, with a 200% gain over five years. Outpaced the S&P 500, they have. But past performance, as any sensible man knows, is no guarantee of future results.

Future Promises Cost a Pretty Penny

The rub, see, is this: fulfillin’ all these promises ain’t free. They gotta build a whole mess of data centers, lay down a lot of wire, and spend a heap of money just to start deliverin’ on what they’ve promised. That’s a mighty big cash outlay, and it’s got some investors a bit skittish. I can’t say I blame ’em. It’s like promisin’ a fella the moon – sounds grand, but deliverin’ it? That’s a different story.

And they ain’t the only game in town. Amazon, Microsoft, and Alphabet’s Google Cloud are all fightin’ for the same pie. It’s a crowded field, and competition’s fierce. But if Oracle can convert even a portion of this here backlog into actual revenue, they’ll lock in billions and keep growin’.

The price-to-earnings ratio has come down a bit recently, from the low 30s to around 26. Old Warren Buffett always said to buy good businesses at fair prices. And I reckon Oracle might be reachin’ that point, mostly because of this record backlog. Now, they just gotta show they can deliver and stay relevant in this here ultra-competitive landscape. It’s a tall order, but then again, so was buildin’ the transcontinental railroad.

2026-01-26 08:12

Future Promises Cost a Pretty Penny

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