Oracle (NYSE:ORCL) stock has fallen by 55% from the all-time high reached last October, and investors will be wondering if this beaten-down name now offers a big opportunity.

Summer Sale - Claim 70% Off TipRanks

200% short exposure to ORCL with ORCZ

While the company has established itself as a major provider of AI infrastructure, concerns over its heavy debt load and the financial strength of some major customers continue to weigh on the investment case.

Oracle’s fiscal 2027 first-quarter results, due September 8, could provide some clarity, but investor Anthony Di Pizio, who writes for The Motley Fool, does not expect the report to fundamentally change sentiment.

The key issue is Oracle’s enormous remaining performance obligations (RPO), which reached a record $638 billion at the end of fiscal 2026, up 363% year over year. RPO represents contracted business that has yet to be delivered, making it an important indicator of future revenue. Much of the backlog relates to AI infrastructure, reflecting strong demand for Oracle’s cloud services from customers including OpenAI, xAI, and Meta Platforms.

Oracle’s cloud infrastructure business is expanding rapidly. FQ4 revenue rose 21% year over year to $19.2 billion, while cloud infrastructure revenue jumped 93% to $5.8 billion. The company’s data centers combine advanced Nvidia and AMD chips with high-speed networking and automated deployment systems, allowing Oracle to provide AI customers with significant computing capacity at competitive prices.

However, the concentration of its backlog creates a major risk. The Wall Street Journal previously reported that roughly $300 billion of Oracle’s RPO could be tied to OpenAI. That is concerning given OpenAI’s substantial losses, despite annualized revenue of around $40 billion, and its commitments to other cloud providers such as Microsoft. Therefore, Di Pizio thinks there is uncertainty over whether OpenAI can ultimately meet all of its obligations to Oracle.

That risk is amplified by Oracle’s borrowing. The company had $122 billion in long-term debt as of May 31 and has announced plans to raise another $40 billion through debt and equity. If Oracle spends heavily expanding its data-center capacity but fails to convert its backlog into actual revenue, its financial position could come under considerable pressure.

Meanwhile, the stock’s valuation already reflects some of these concerns. At a P/E ratio of about 24.8, Oracle trades below the S&P 500’s 26.1 multiple and the Nasdaq-100’s 34.1. Management could reassure investors by providing greater detail on the RPO’s composition and demonstrating that the backlog is not excessively dependent on a handful of customers. A commitment to limit further borrowing could also help.

Nevertheless, Di Pizio believes the issues are too significant to justify loading up ahead of the print. “Despite Oracle’s seemingly attractive valuation, I personally don’t feel comfortable buying its stock ahead of its upcoming report, because the severe risks facing the business can’t be fully resolved in a single quarter,” the investor summed up. (To watch Di Pizio’s track record, click here)

In general, the Street’s analysts have a far more favorable take. The stock claims a Strong Buy consensus rating based on 28 Buys and 4 Holds. Going by the $257.79 average price target, the shares will appreciate by 80% over the one-year timeframe. (See ORCL stock forecast)