Oracle Corporation

New York Stock Exchange
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Very Bullish +85

Oracle stock falls 3%: why this analyst still sees upside

📉 Oracle shares fell 3.4% following reports of a canceled $1.1B-$1.4B order for 300-400 Nvidia GB300 NVL72 racks from Super Micro Computer.

🤖 Despite the cancellation, Oracle reported record remaining performance obligations of $553 billion, up 325% year-over-year to fiscal third-quarter 2026.

☁️ Cloud infrastructure revenue surged 84% to $4.9 billion as AI workload demand exceeds current capacity constraints.

💰 The company plans a massive $45-$50 billion capital raise in 2026 to expand its cloud infrastructure footprint for major clients like OpenAI and Nvidia.

⚠️ Analysts warn of potential free-cash-flow squeezes due to AI capex ramping faster than cash generation, risking a balance-sheet downgrade.

📉 Super Micro Computer faces near-term headwinds as the order cancellation impacts demand visibility and backlog quality for its AI server business.

💡 Wedbush analyst Dan Ives maintains an outperform rating on Oracle with a $225 price target, implying roughly 27.6% upside from recent levels.

🤝 Oracle signed a 2025 agreement to supply OpenAI approximately $300 billion in computing power over five years starting in 2027.

🔗 The company partnered with Nvidia to integrate Oracle Cloud Infrastructure with its full-stack AI computing platform.

💵 Oracle has already raised $30 billion through investment-grade bonds and mandatory convertible preferred stock to fund its growth strategy.

📊 LSEG data shows 35 of the 46 analysts covering Oracle currently rate the stock as a buy or strong buy.

📈 The market appears to be overreacting to a single hardware order cancellation while ignoring the broader contract-backed AI infrastructure cycle.

🏗️ Capacity constraints in specific areas underscore the scale of investment required to support customers, validating Oracle's buildout playbook.

⚖️ Dan Ives argues that concerns over capital intensity are backward-looking and fail to appreciate the scale of contracted demand underpinning investments.

📉 Shares have declined nearly 10% in 2026 so far, reflecting investor caution despite a 28% gain over the past year.

Bullish Signals
  • Oracle's contract-backed demand is accelerating with remaining performance obligations reaching $553 billion, up 325% year-over-year.
  • Cloud infrastructure revenue surged 84% to $4.9 billion in the latest quarter, demonstrating strong underlying market demand.
  • The company has already raised $30 billion through investment-grade bonds and mandatory convertible preferred stock to fortify its balance sheet.
  • Analyst Dan Ives from Wedbush Securities initiated coverage with an outperform rating and a price target of $225, implying 27.6% upside potential.
  • Oracle has secured major partnerships including a $300 billion agreement to supply computing power to OpenAI over five years starting in 2027.
  • Forty-six analysts covering the stock currently rate it as buy or strong buy, with 35 of them favoring long-term investment.
  • The company is partnering with Nvidia to integrate Oracle Cloud Infrastructure with its full-stack AI computing platform.
  • Despite short-term cancellations, management views the remaining performance obligations and funded capital strategy as solidifying its position in AI infrastructure.
Risk Factors
  • Oracle stock fell approximately 3.4% on Friday after reports that the company canceled a hardware order with Super Micro Computer estimated between $1.1 billion and $1.4 billion.
  • Shares of Oracle have declined nearly 10% so far in 2026, reflecting investor concerns about the scale of capital expenditures despite strong underlying demand.
  • The cancellation raises questions about Oracle's near-term spending plans even as it aggressively expands its cloud infrastructure to support surging AI workload demand.
  • Oracle risks a damaging free-cash-flow squeeze or balance-sheet downgrade if its AI cloud capital expenditure ramps faster than cash generation can support.
  • Analyst Dan Ives from Wedbush Securities highlights that the downside case against Oracle centers on its capital expenditures and negative free cash flow, which could pressure the stock.
  • Some investors express concerns about the scale of capital expenditures required to meet contractual obligations and whether the current funding strategy is sufficient.
  • Oracle has indicated demand exceeds available capacity in certain areas, which could lead to further delays or constraints if its $45 billion to $50 billion 2026 buildout faces execution challenges.
Full Analysis
Oracle shares declined approximately 3.4% following reports that the technology giant canceled a significant hardware order with Super Micro Computer, a deal estimated between $1.1 billion and $1.4 billion for 300 to 400 Nvidia GB300 NVL72 racks. Despite this short-term disruption, analyst sentiment remains bullish based on strong long-term fundamentals revealed in Oracle's fiscal third-quarter 2026 results, which show remaining performance obligations of $553 billion, a 325% year-over-year increase, and cloud infrastructure revenue rising 84% to $4.9 billion. This aggressive expansion comes as the company targets major clients including OpenAI, Nvidia, xAI, and Meta to support surging AI workload demand, with plans to raise between $45 billion and $50 billion in 2026 for infrastructure buildouts. Dan Ives of Wedbush Securities maintains an outperform rating on Oracle with a $225 price target, representing about 27.6% upside from recent levels, arguing the market is fundamentally misinterpreting the company's contract-backed investment cycle as speculative risk. Ives notes that Oracle has already raised approximately $30 billion through investment-grade bonds and mandatory convertible preferred stock to fortify its balance sheet for the required capital expenditures. While some investors express concern over potential free-cash-flow squeezes due to rapid AI cloud capex ramps, 35 of the 46 analysts currently covering the stock rate it as a buy or strong buy, suggesting consensus confidence in Oracle's strategic positioning despite the high-profile hardware cancellation and recent share price decline of nearly 10% so far in 2026.