Oracle Stock Suffocates as Barclays & Scotiabank Analysts Slash Price Forecast Just Before Earnings

The market is showing some nerves regarding Oracle ORCL -0.92% ▼ as ORCL shares slipped roughly 3% at market close yesterday. The move comes as the enterprise software giant prepares to report its third-quarter results today after market close. While the company has been a central player in the artificial intelligence boom, its stock has struggled so far this year, falling about 23% as investors digest the high costs associated with its aggressive expansion. This downward pressure intensified after both Barclays and Scotiabank lowered their price targets for the stock, showing they are worried about how much the company is spending on big hardware and data center projects right now.

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Barclays Flags Potential Margin Squeeze

A significant driver of today’s price action is a new note from Barclays. While the firm acknowledged that Oracle is seeing “meaningful AI-driven revenue acceleration,” analysts slashed their price target on the stock to $230 from $310. The concern isn’t a lack of growth, but rather the cost of achieving it.

Barclays analyst Raimo Lenschow warned that the rapid ramp-up in AI capacity, including massive investments in data centers, is creating “negative timing effects.” Essentially, Oracle is spending heavily upfront on infrastructure and leases before that capacity starts generating full revenue. This dynamic could lead to short-term pressure on gross margins and earnings per share, giving bears a data point to worry about even as bulls cheer the growing top-line momentum.

Scotiabank Sees a Valuation Reset

Not all analysts are as concerned about the spending. Scotiabank maintained its “Sector Outperform” rating, though it did slightly trim its price target to $215 from $220. Analyst Pat Colville noted that investor expectations have moderated, and the stock is now trading in line with its five-year historical average.

According to Scotiabank’s team, led by Patrick Colville, the increased capital expenditures (CapEx) are a necessary step to meet the company’s 2026 targets for its Cloud Infrastructure. The firm also pointed to OpenAI’s massive $110 billion capital raise as a sign that one of Oracle’s biggest partners will have the financial muscle to meet its long-term commitments.

Oracle Rejects Reports of Data Center Delays

The company also addressed recent rumors regarding its flagship AI data center project in Abilene, Texas. Bloomberg recently reported that Oracle and OpenAI had pulled back on expansion plans for the site due to financing hurdles, potentially leaving room for Meta Platforms META +0.39% ▲ to step in.

Oracle and its developer partner, Crusoe, have flatly rejected these claims. The companies stated they are operating “in lockstep” to deliver one of the largest AI data centers in the world. Oracle confirmed that two buildings at the Abilene campus are already operational and the rest of the project remains on track. Despite this reassurance, the initial reports contributed to the cautious sentiment hanging over the stock today.

Is ORCL Stock a Good Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on ORCL stock based on 26 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $265.10 per share implies 75% upside potential.

See more ORCL analyst ratings

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