Dan Ives says Wall Street is pricing Oracle's order backlog as though half of it will never turn into revenue — and he thinks that bar is too low.
Oracle had just reported results showing negative $5.4 billion in free cash flow, which was still twice as good as the roughly negative $10 billion the Street had expected. Ives read the quarter as evidence the market has gotten too bearish on the whole software trade, not just Oracle.
"When you think about the RPO and really the revenue that they have in the backlog, I think the street is almost assuming 50 to 60% of that never happens, that they're never going to be able to build-out the data center and the conversion of revenue. I think this was a big step in the right direction."
Ives is a partner and senior managing director at Yorkville Ives, covering tech for CNBC's "Fast Money."
I listened to the full segment so you can skip it.
Here are the 4 takeaways that matter.
👤 Guest: Dan Ives, Partner and Senior Managing Director at Yorkville Ives
🎙️ Host: Melissa Lee, who anchors CNBC's "Fast Money"
📰 Published: 10 September 2026 on CNBC's "Fast Money"
🔴 YouTube | ⏱️ 5 min
Key Takeaways
The street is pricing in that 50-60% of Oracle's backlog never converts to revenue, and Ives thinks that's too pessimistic
Free cash flow came in at negative $5.4B, about half as bad as the roughly negative $10B the Street expected
Oracle has been "a penalty box stock," and this quarter is a first step out of it — not a full clearance
He wants to see several more quarters of execution before giving it credit
The Palantir-to-Snowflake shift is the signal that software is now trading on real AI use cases, not just hype
Nvidia still has the best perch in the trade, with Asian chip demand running 13-to-1 against supply
1. Oracle's Backlog Deserves It
Asked directly whether he likes Oracle after the print, Ives said the market is under-crediting the size of the company's order backlog.
He put a number on the market's skepticism. "When you think about the RPO and really the revenue that they have in the backlog, I think the street is almost assuming 50 to 60% of that never happens, that they're never going to be able to build-out the data center and the conversion of revenue. I think this was a big step in the right direction."
The stock's positioning going in was almost universally negative. "This is a penalty box stock. I mean, New York City cab driver has been bearish and Oracle." He said Oracle has to keep proving out its data center build because the result matters beyond just this one name
The result reads through to the rest of the software group. "When you think about Palantir Snowflake Salesforce call it a step in the right direction. Now Oracle you know definitely better days ahead from the SaaS apocalypse that we saw even a few months ago"
2. Out of the Penalty Box
Lee pushed on whether this is the all-clear for the software trade broadly, and separately on what would get Oracle itself fully rehabilitated.
Institutional investors are underweight software and will have to chase it. "Also institutional investors, they're caught offsides, so they're going to have to definitely adjust to owning more software because the software has really been a do not enter zone."
It isn't a clean all-clear — Adobe is the counterexample he named. "I wouldn't say it's an all clear because Adobe is a good example. That's still a lot more wood to chop, but definitely a huge step. And you're going to see software I think, outperform as we go into the rest of the year."
Oracle needs a track record, not one good print. "Well Rome wasn't built in a day. So they're going to have to show a few more quarters." He said the company did well on its earnings call laying out how it's navigating the data center build-out tied to OpenAI's $300 billion commitment, but "it's not going to give him credit for just one quarter"
3. Palantir-Snowflake Signal
Asked whether Nvidia or another name is now the better proxy for the AI trade instead of Oracle, Ives pointed to a shift already underway in software.
The dynamic that changed was Palantir's move into Snowflake's territory. "I think the biggest dynamic change was from Palantir to Snowflake because that really showed that software trades now on the use cases are starting to happen." He said that shows up next in cybersecurity names like CrowdStrike and Palo Alto Networks
Chips still anchor the whole trade. "It all does. It starts and ends with the godfather of AI and Nvidia. They have the best perch."
4. Chips Before Software
Asked how to think about semiconductors given the SOX index has round-tripped from its highs while Nvidia itself has pushed to new ones, Ives gave the demand math behind his preference.
The chip shortage in Asia is severe by his numbers. "The reality is demand and supply today in chips based on what we see in Asia is 13 to 1 in terms of demand and supply." He said that spillover benefits Intel and AMD as well as Nvidia, and that hyperscaler capital, especially from Microsoft, is rotating into the trade
His framing for where the cycle stands: early, and selective. "We're in the third inning of the AI revolution trade, but they're not all winner." Software sentiment, in his words, is "somewhere between a green, you know, a light green" — improving, not fully bullish
Bonus Insights
Ives said the earnings call itself was part of the improvement. He said management did a great job on the call in laying out how it is navigating the data center build-out, and that the next few quarters of delivery are what will decide whether the market gives Oracle credit for it
Ives's bottom line is that Oracle's quarter was good enough to start correcting a backlog the market has priced too skeptically, but the software trade overall — and Oracle specifically — still has to prove it over several more quarters, with the semiconductor trade, led by Nvidia, still the safer place to be positioned first.
Products, Companies & Tools Mentioned
Oracle (Reported negative $5.4B free cash flow, about half as bad as Street estimates; Ives says the market is pricing in that 50-60% of its RPO backlog never converts)
Palantir and Snowflake (The pairing Ives calls the "biggest dynamic change" in software — proof that AI use cases are now driving software valuations)
Adobe (The counterexample to an all clear for software, which Ives says still has "a lot more wood to chop")
Salesforce (Named alongside Palantir and Snowflake as part of the software group's step in the right direction)
Nvidia ("The godfather of AI" — Ives says it has the best perch in the AI trade and anchors demand for chips)
CrowdStrike and Palo Alto Networks (Cybersecurity names Ives expects to benefit from the same use-case-driven rotation into software)
Intel and AMD (Named as beneficiaries of the same 13-to-1 chip demand-supply imbalance in Asia that benefits Nvidia)
Microsoft (Cited as the hyperscaler drawing the most rotating capital right now)
OpenAI (Its roughly $300 billion commitment underpins the data center build-out Ives says Oracle has to prove it can execute)
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