Oracle Stock Gains After S&P Downgrade as Cloud Backlog Drives Investor Optimism

S&P Global Ratings lowered Oracle's long‑term issuer rating from BBB to BBB‑, citing higher planned capital expenditures for 2027 (US$90‑95 billion versus earlier US$60 billion), a projected free cash‑flow deficit of about US$42 billion and rising debt levels. Despite the downgrade, Oracle’s shares rose roughly 3 % on Thursday, closing near US$144.5, and gained another 1 % in pre‑market trade the next day.

Investors focused on the company’s massive cloud order backlog, reported at US$638 billion, which includes contracts worth about half of the remaining unbilled commitments tied to OpenAI. Oracle plans to rely more on equity financing, having raised US$5 billion through a mandatory convertible preferred share in early 2026 and targeting up to US$20 billion of additional capital this year.

The market reaction suggests confidence that the sizeable cloud backlog can offset near‑term cash‑flow pressures, though analysts warn that continued heavy investment in AI‑related infrastructure could increase reliance on future capital raises.