Analysts on Wall Street are growing worrisome of Oracle’s upcoming Earnings report, causing ORCL stock to dip on Monday. The earnings are slated for Tuesday, March 10, after the market closes. The boom in AI demand over the past year is the catalyst for bullish expectations for Oracle’s Q3 earnings, aiming for 20% revenue growth and 16% profit expansion.
Analysts remain optimistic about Oracle’s long-term prospects despite recent challenges, including job cuts and margin pressures from AI investments. However, that hasn’t stopped worries in the near term. On the one hand, analysts continue to view the company as a major beneficiary of the AI infrastructure boom. On the other hand, the scale of investment required to build that future is raising serious questions about AI spending, which impacts revenue margins.
Specifically, two big Wall Street firms cut their forecasts for Oracle (ORCL) stock ahead of earnings tomorrow. Deutsche Bank analyst Brad Zelnick cut his target today from $375 to $300, while maintaining a Buy rating. Per Zelnick, the expectation of a multi-year period of significant cash burn tied to AI expansion has raised questions about how much additional capital may eventually be required. Furthermore, Investors are also debating whether Oracle’s medium-term revenue ambitions are achievable. Oracle’s cloud guidance has been difficult to predict in the past and that reliance on a small number of major customers adds another layer of uncertainty.
Oracle shares remain 54% below their September peak despite positive developments such as a successful investment-grade bond offering and news that key customer OpenAI secured a $110 billion funding round. At press time, the stock is down 22.22% YTD.