Oracle trades 34% below Wall Street's $242.05 consensus price target even as its cloud backlog reaches $638 billion, setting up Thursday's fiscal Q1 2027 report as a test of who has it right. Analysts have kept raising fiscal 2027 estimates through the stock's slide even as free cash flow stays deeply negative.
Oracle closed at $158.78, some 34% below Wall Street's $242.05 consensus price target, a gap 24/7 Wall St. called unusually wide for a mega-cap. The company reports fiscal Q1 2027 results on September 10 after the close, with guidance calling for revenue growth of 27% to 29% and non-GAAP EPS between $1.72 and $1.76.
Capital spending drove the derating
The buildout behind that gap has come at a steep cash cost. Free cash flow for fiscal 2026 came in at negative $23.69 billion, on capital expenditures of $55.663 billion. Management guided to roughly $40 billion in fresh debt and equity funding across fiscal 2027.
The plan includes a $20 billion at-the-market equity issuance already underway. Shares are down 27.98% over the past year and 17.74% year to date.
Analysts have kept raising, not cutting, estimates
Despite the sell-off, the sell side has not backed off. The ratings distribution across 44 covering analysts skews decisively bullish: 8 Strong Buy, 28 Buy, 7 Hold, 1 Sell, 0 Strong Sell. Over the trailing 30 days, fiscal 2027 EPS estimates saw 21 upward revisions versus 12 downward, and fiscal 2028 saw 20 upward against 6 downward.
The bull case rests on the $638 billion Remaining Performance Obligations backlog, up 363% year over year. Management expects 12% of RPO to be recognized in the next 12 months and another 34% between 13 and 36 months. That underpins a fiscal 2027 revenue target of $90 billion.
Oracle's prepay model targets AWS pricing
Oracle's pitch to customers is prepay-and-bring-your-own-GPU access, a model 24/7 Wall St. said squeezes AWS from below on price. Oracle's cloud infrastructure revenue climbed 93% year over year to $5.79 billion. Of its backlog, $75 billion is tied to bring-your-own-hardware or prepaid GPU deals.
AWS answered with its own numbers. Revenue reached $42.23 billion, up 37%, at a 39.4% operating margin. Backlog reached $496 billion.
Amazon's AWS business, by comparison, posted trailing-twelve-month free cash flow of negative $7.6 billion.
Sources: 24/7 Wall St., IG – News and trade ideas, 24/7 Wall St.
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