Oracle's stock (ORCL) advanced 5% on Thursday, building on a 3% gain from the prior session, as investors digested a range of analyst opinions ahead of the company's fiscal first-quarter earnings report, scheduled for September 8.
The stock has been under pressure due to concerns about Oracle's aggressive capital expenditures, rising debt, and the financial burden of its long-term, noncancelable commitments tied to artificial intelligence expansion. However, some analysts argue that the company may be entering a more favorable phase as cloud growth accelerates and funding needs begin to ease.
Bernstein sees Oracle entering growth phase
Bernstein analyst Mark Moerdler characterized Oracle as a complex and volatile business, with investor worries centered on profitability and the cash required to fund its long-term commitments. Moerdler believes Oracle could be nearing the end of its need for additional capital and sees the company in the early stages of an investment phase that could accelerate both revenue and profits. His $325 price target implies substantial upside from Oracle's current share price of $145.30.
A key pillar of his bullish view is Oracle Cloud Infrastructure (OCI), which he noted continues to outpace major hyperscaler peers, including Microsoft's Azure, Google Cloud, and Amazon Web Services. Oracle reported 93% constant-currency growth for OCI in its latest fiscal fourth quarter. Moerdler expects OCI growth to accelerate during fiscal 2027, with the segment growing faster year over year than Oracle's overall revenue.
Analysts cut targets despite bullish views
Oracle's aggressive AI expansion has also raised concerns about capital requirements. The company plans to spend $95 billion on capital expenditures during fiscal 2027, which runs from June 1 through May 31. Oracle raised $43 billion through debt financing in fiscal 2026 and expects to raise roughly $40 billion in fiscal 2027 through a combination of debt and equity.
Jefferies analyst Brent Thill lowered the firm's price target to $290 from $320 while maintaining a Buy rating. Jefferies noted that sentiment toward Oracle was near peak-negative and that much of the negative outlook may already be reflected in the stock. Thill expects a potential growth inflection in Oracle's cloud business and stronger software-as-a-service growth to challenge the bearish investment case.
TD Cowen also reduced its price target to $240 from $300 while retaining a Buy rating. The firm identified Oracle's analyst day on October 28 as the next major catalyst, expecting the event to focus heavily on the cloud business and potentially include updated fiscal 2030 targets.
Cloud growth remains central to Oracle outlook
Oracle's complex business structure has made it difficult for investors to assess its longer-term growth and profitability, particularly because its products and services are at different stages of maturity. The company also has $638 billion in remaining performance obligations, or backlog, leaving investors focused on how quickly those commitments can be converted into revenue.
Moerdler's thesis also depends on the changing composition of Oracle's revenue. Lower-growth areas such as its license business are declining, while higher-growth software-as-a-service businesses, including Fusion, NetSuite, and OCI, are becoming a larger share of software revenue.
Oracle's upcoming fiscal first-quarter results could provide investors with further insight into the pace of cloud growth, AI-related investment, and the company's ability to fund its expansion. With analyst price targets ranging from $240 to $325 despite Buy or bullish ratings, Wall Street remains divided on the balance between Oracle's growth opportunities and the financial demands of its AI expansion.
For broader context on AI-driven market moves, see Snowflake's recent surge and analyst views on SpaceX. Also, check how Oracle shares reacted to rising bond yields.
This article is for informational purposes only and does not constitute financial advice.
