Oracle’s stock price dropped by 10% after its fiscal Q2 results failed to impress investors. The company’s revenue grew 13.9% year-over-year, but fell short of expectations. The main concern was the lack of growth in Oracle Cloud Infrastructure (OCI) revenue and the high capital expenditures that led to negative free cash flow.
Analyst Brad Sills from Bank of America thinks this is not a sign of a decline in Oracle’s business, but rather a timing mismatch between investing in AI infrastructure buildout and converting it into revenue. He believes fundamentals remain strong, with growing demand for AI, improving OCI architecture, and access to financing.
Sills assigns Oracle an “Outperform” rating, citing potential catalysts such as accelerating revenue conversion, improved visibility of the OCI AI margin profile, and AI-driven momentum across applications and database offerings. Although the analyst reduced their price target from $368 to $300 due to valuation contraction in the AI cohort, the new target still allows for 50% returns over the next year.
Analysts overall are optimistic about Oracle’s prospects, with a Moderate Buy consensus rating based on an average price target of $346.11 and a potential one-year return of 73%.
Source: https://www.tipranks.com/news/its-still-rock-solid-says-bank-of-america-about-oracle-stock