Oracle’s $664 Billion Backlog and $18 Billion in Debt…

Oracle reported $664 billion in remaining performance obligations, up 46% from $455 billion a year earlier and just short of Microsoft's $678 billion, in its first-quarter fiscal 2027 results. Microsoft's commercial RPO reached $678 billion at June 30, 2026, according to its Q4 FY26 results.At the same time, roughly $18 billion in leveraged loans tied to Project Jupiter, Oracle's marquee data centre buildout in New Mexico, are trading between 89 and 91 cents on the dollar in the secondary market. The gap between those two numbers is the story: the backlog is the bull case, and the loan quote is the credit market's price on whether Oracle can build what it has promised.

What the $664 Billion RPO Actually is and When it Converts

Remaining performance obligations, or RPO, represent contracted future revenue that Oracle has not yet recognised. The $664 billion figure is up 46% from $455 billion a year earlier and nearly matches Microsoft's $678 billion. Oracle's management told analysts it expects roughly half of the backlog to convert to recognised revenue within 36 months, meaning the remainder extends further into the decade and depends on infrastructure that, in several cases, does not yet exist.The Q1 FY27 quarter ended August 2026 with total revenue of $19.3 billion, up 30% year over year. Cloud infrastructure revenue hit $7.4 billion, a 121% increase, and total cloud revenue reached $11.6 billion, up 62%. Capital expenditure for the quarter alone was $28.5 billion, and free cash flow was negative $5.4 billion, compared with negative $362 million in the prior-year quarter. Oracle delivered 850 megawatts of new data centre capacity and more than 300,000 GPUs, with fleet utilisation at 97.9%.

The Jupiter Loans at 89 Cents and Why Par Matters

Project Jupiter is Oracle's 1,400-acre, $165 billion data centre campus in Dona Ana County, New Mexico, part of the broader Stargate initiative. The build is financed in part by an $18 billion loan facility arranged by Santander and Jefferies. That paper is trading at 89 to 91 cents on the dollar, implying $1.6 to $2 billion in market-priced losses for the lending syndicate. When a leveraged loan trades below par, it means buyers in the secondary market are demanding a bigger yield cushion to compensate for the risk that the borrower may not deliver the returns the loan was priced against. As FourWeekMBA's analysis noted, "when a lending syndicate cannot place paper tied to a specific campus, the binding question has shifted from whether the asset can be built to who is willing to hold the claim on it." The discount reflects the syndicate's difficulty placing the full facility with institutional investors, not a default scenario, but the pricing signals measurably lower confidence than the deal terms originally assumed.

The Balance Sheet: Debt, Capex, and a Rating One Notch Above High Yield

Oracle's total debt stood at approximately $125.3 billion as of August 31, 2026, comprising $7.6 billion in current notes payable and other borrowings and $117.7 billion in non-current borrowings. Against $37.1 billion in cash and marketable securities, net debt was about $88 billion.On 9 July 2026, S&P Global Ratings downgraded Oracle's long-term issuer credit rating to BBB- from BBB with a stable outlook, placing the company one notch above speculative-grade territory.S&P cited projected FY2027 capital expenditure of $90 to $95 billion, a free operating cash flow deficit expected to widen to negative $42 billion in FY2027, and adjusted debt-to-leverage ratios reaching the mid-4x range, which exceeds the threshold S&P associates with a BBB rating.The company completed a $20 billion at-the-market equity sale during Q1 to partially fund the buildout, a move that dilutes existing shareholders but avoids adding to the debt load. Oracle shares closed at $144.56 on 23 September and traded as low as $133.48 on 24 September, down about 4.75% by midday following news of the Project Jupiter force majeure notice. Founder Larry Ellison abruptly cancelled a planned $7.5 billion share sale without public explanation, according to Benzinga reporting.

Customer Concentration: Roughly $300 Billion Tied to OpenAI

Approximately $300 billion of the $664 billion backlog is tied to a single customer: OpenAI. That represents about 45% of Oracle's RPO. Benzinga reported that the startup accounts for a substantial share of Oracle's RPO, creating a concentration risk that credit analysts have flagged as unusual for an enterprise software company of Oracle's scale.If OpenAI's own cash burn trajectory shifts, or if the artificial intelligence compute market reprices, the backlog tied to that single relationship could convert more slowly than Oracle's 36-month guidance assumes.The first phase of the Project Jupiter buildout is reported to be at least seven months behind schedule. New Mexico regulators rejected the natural gas pipeline needed to serve the site, delaying it to at least next year. The New Mexico Supreme Court temporarily halted the air quality permit hearing, citing biodiversity concerns, and the state raised separate objections about water consumption. Oracle co-CEO Clay Magouyrk acknowledged the delays but stated that "neither of these sites will have any impact on our FY '27 revenue or earnings guidance."

What Would Resolve This Either Way and When

FinanceFeeds reported on the Project Jupiter loan pricing on 21 September and on the $664 billion RPO on 23 September. The picture changed on 24 September, when Oracle sent a force majeure notice to Project Jupiter's developer, citing contractual protections if the data centre is delayed.Oracle said the campus remains on its planned schedule and described such notices as commonplace for developments of this scale.The force majeure notice adds a new near-term development to watch alongside the loan pricing. First, whether the Jupiter loans recover toward par in the secondary market over the next two quarters would indicate whether institutional lenders are gaining or losing confidence in the build timeline.The market will also be watching whether Oracle's notice leads to changes in the project's construction schedule, contractual payments, or financing arrangements.Second, Oracle's Q2 FY27 results, expected in December, will show whether the $664 billion backlog is converting at the pace management guided or whether the infrastructure delays are slowing revenue recognition. Third, any change to the OpenAI contract terms or to OpenAI's own financing trajectory would directly affect the largest single component of the backlog.The S&P rating sits one notch above high yield. A further downgrade to BB+ would reclassify Oracle's debt as speculative grade, potentially triggering forced sales by institutional holders restricted to investment-grade paper and widening the spread the company pays on future borrowing.