Second-quarter financial results from Oracle Corp (NYSE:ORCL) are being used by analysts to understand overall demand for AI infrastructure. Here's what analysts are saying after the company missed revenue estimates, beat earnings per share estimates and provided an update on its backlog.
Oracle stock is feeling bearish pressure. What’s behind ORCL decline?
- JPMorgan analyst Mark Murphy maintained a Neutral rating and lowered the price target from $270 to $230.
- Wedbush analyst Dan Ives has an Outperform rating, but has not cited a specific price target.
- Bank of America’s Brad Sills maintained a Buy rating on Oracle and lowered the price target from $368 to $300.
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JPMorgan: Second-quarter financial results from Oracle showed the company is a key beneficiary of AI infrastructure demand, Murphy wrote.
"The company again posts a material step-up in RPO, highlights accelerating OCI deployment activity, and underscores a more flexible funding model designed to partially temper concerns around capital intensity," Murphy said of the company's remaining performance obligations (RPO).
The analyst said third-quarter guidance came in below consensus estimates and the incremental margin contribution appears low.
"Oracle added $68B of RPO in Q2, lifting total backlog to $523B and again demonstrating that hyperscale and frontier-model customers, namely Meta, NVIDIA, and others are committing to long-duration OCI capacity at escalating scale."
The company's guidance indicates incremental RPO tied to multi-year commitments. This could have a limited impact on the stock’s near-term outlook.
"We think the presence of a resilient, sticky, and largely recurring revenue stream with relatively low viability risk positions Oracle well to relatively outperform."
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Wedbush: Ives highlights Oracle's RPO and AI growth potential and how it applies to the entire AI tech sector.
"Last night Oracle's earnings caused some more jitters for tech investors as the company in light of Street numbers," Ives said.
The analyst said Oracle's earnings could see bears "yell fire in a crowded theater."
Ives said he disagrees with this view with Oracle's RPO of $523 billion topping a Street estimate of $500 billion.
"This is the number we are most focused on around the future and health of Oracle's AI buildout and strategy looking ahead."
This figure should translate to 17% revenue growth in 2026, 35% in 2027 and 47% in 2028, Ives says.
"This is why Oracle is a bedrock for the AI Revolution,” he adds.
Bank of America: Second-quarter results could show a timing gap between AI infrastructure build and revenues, Sills said in a new investor note.
"If you build it, they will come. But you have to build it first," Sills said.
Sills said Oracle is entering its largest phase of the AI infrastructure buildout and could be "paying the price to invest in growth."
"We view the current mismatch of spend versus revenue as an investment curve issue rather than a change in fundamentals."
Still, “the basic fundamentals of Oracle remain strong,” he adds.
"We see potential for sentiment and estimates to reset higher."
Price Action: Oracle stock is down 14.3% to $191.02 on Thursday versus a 52-week trading range of $118.86 to $345.72. Oracle shares are up 15.1% year-to-date in 2025.
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