Oracle Corporation

New York Stock Exchange
Back to all articles
Somewhat Bearish -45

Morgan Stanley revamps Oracle stock price target

📉 Oracle shares closed at $173.28, down 47% from their September high of $328.33 according to Yahoo Finance.

🤖 Oracle Cloud Infrastructure (OCI) has become the primary growth driver fueled by the artificial intelligence boom.

💼 Morgan Stanley analyst Keith Weiss lowered the stock price target from $213 to $207 and maintains an equal-weight rating.

⚠️ The bear case price target is set at $75 due to concerns over accelerating EPS growth and GPUaaS opportunities falling short.

📊 Q3 revenue remained strong, but gross margins ticked down 590 basis points year-over-year due to GPU-as-a-Service capacity ramp.

💸 Oracle canceled a massive order for Nvidia GB300 NVL72 racks from Super Micro Computer valued between $1.1 billion and $1.4 billion.

👥 The company laid off 20,000 to 30,000 employees in April to resolve AI datacenter financing challenges, according to Forbes.

⚠️ A significant portion of Oracle's Remaining Performance Obligations comes from the OpenAI partnership, creating substantial customer concentration risk.

📉 Oracle reported a decline in deferred revenue despite growing RPO, highlighting a potential backlog issue or recognition problem.

💰 Senior notes and long-term borrowings face significant fair value declines between $90.3 billion and $130.9 billion outstanding.

🏗️ The company has $261 billion in additional lease commitments disclosed in their financial filing.

⚡ Oracle refuted claims about canceled AI datacenter plans in Abilene, Texas, stating operations are proceeding at record-breaking pace.

💰 Oracle gained $100 billion in market cap following an expanded partnership announcement with Amazon Web Services on April 16.

🤖 The company was previously recognized as the fourth AI infrastructure hyperscaler by Bank of America last October.

⚠️ Analysts identified substantial leverage driven by GPUaaS capacity investments as a primary downside risk for the stock.

Bullish Signals
  • Oracle Cloud Infrastructure (OCI) unit has become the primary driver of the stock's growth, powered by the AI boom.
  • Bank of America recognized Oracle as the fourth AI infrastructure hyperscaler last October.
  • Oracle refuted claims about delays at its Abilene AI data center, stating two buildings are operational and it completed leasing for additional 4.5GW capacity.
  • Oracle gained $100 billion in market cap after announcing an expanded partnership with Amazon Web Services on April 16.
  • The company reported strong Q3 results with Remaining Performance Obligations (RPO) of $553 billion, representing a 325% year-over-year increase.
  • Morgan Stanley raised their fiscal year 2028 Cloud Database Estimates by 15%, demonstrating analyst confidence in long-term growth.
  • The company completed leasing for an additional 4.5GW of capacity to deliver on commitments to OpenAI at record-breaking pace.
Risk Factors
  • Stock price dropped 47.22% from its high of $328.33 on September 10 to close at $173.28 on April 26, reflecting significant market bearishness.
  • Morgan Stanley analyst Keith Weiss lowered the stock price target from $213 to $207 and reiterated a hold rating, citing concern over accelerated EPS growth in out years.
  • The bear case for Oracle assumes a price target of $75.00 due to lack of confidence that GPUaaS opportunities will meet expectations.
  • Gross margins ticked approximately 590bps lower year-over-year driven by capacity ramp costs for GPU-as-a-Service, a trend analysts expect to continue during the early data center buildout stage.
  • Oracle canceled a $1.1 billion to $1.4 billion order for Nvidia GB300 NVL72 racks from Super Micro Computer, highlighting potential supply chain or partnership instability.
  • The company laid off between 20,000 and 30,000 employees in April, indicating ongoing workforce reduction to resolve AI datacenter financing challenges.
  • Oracle's Remaining Performance Obligations (RPO) growth may be misleading as short-term deferred revenues remained flat at $9.9 billion despite RPO growing from $523 billion to $553 billion year-over-year.
  • A significant portion of RPO relies on OpenAI ($300 billion out of $553 billion), creating concentration risk given that Oracle is not yet profitable and OpenAI's financial viability could be a factor.
  • Debt levels are skyrocketing with $130.9 billion in senior notes outstanding as of February 28, 2026, plus $261 billion in additional lease commitments disclosed in the FORM 10-Q filing.
  • A previous plan to expand an AI data center in Texas with OpenAI was dropped in March, though Oracle later refuted reports that this happened, suggesting potential volatility in strategic partnerships or execution issues.
Full Analysis
Morgan Stanley has lowered its price target for Oracle Corp (ORCL) from $213 to $207 per share while maintaining an equal-weight hold rating, citing concerns over gross margins compressing due to the ramp-up of GPU-as-a-Service offerings. In their research note dated April 23, analysts Keith Weiss and his team noted that while Oracle's Q3 top-line results were strong and operating profitability remained solid, gross margins dropped approximately 590 basis points year-over-year. The firm raised its fiscal year 2027 and 2028 Cloud Database Estimates by 3% and 15%, respectively, but issued a bear case price target of $75.00, assuming below-average growth given potential shortfalls in GPUaaS expectations. Despite Oracle being recognized as the fourth AI infrastructure hyperscaler by Bank of America last October, the company faces significant headwinds including substantial debt and lease commitments. Oracle's recent Q3 filing revealed senior notes totaling $130.9 billion and other long-term borrowings of $90.3 billion as of February 28, 2026, alongside $261 billion in additional lease commitments. A major portion of the company's Remaining Performance Obligations (RPO) relies on partnerships with OpenAI, which accounts for at least $300 billion or 54% of total RPO; however, OpenAI remains unprofitable, introducing financial dependency risk. The stock has experienced a significant decline, closing at $173.28 on April 26 after dropping 47.22% from its September 10 high of $328.33, a move predicted in part by Rothschild & Co.'s analyst Alex Haissl who had initiated coverage with a sell rating and $175 price target in September 2025. Recent operational adjustments include layoffs estimated between 20,000 to 30,000 employees announced on April 6, the cancellation of an $1.1 billion to $1.4 billion order for Nvidia GB300 NVL72 racks from Super Micro Computer, and a refutation of reports regarding its Abilene, Texas AI data center project which claims operations are proceeding alongside OpenAI with additional 4.5GW leases completed. Analysts at Morgan Stanley continue to monitor risks including disruptive technologies in data management, faster-than-expected Oracle Cloud Infrastructure capacity ramps, and substantial leverage driven by GPUaaS capacity investments.