Oracle shares remain under pressure even as Bernstein reaffirms a bullish view. ORCL closed Tuesday at $117.98, down 1.51%, and traded around $123.60 premarket Wednesday, a 4.76% gain. Bernstein reiterated an Outperform rating and a $325 price target, roughly 175% above the latest close, while describing Oracle as the most controversial name it covers. The firm pointed to two key catalysts: the OpenAI IPO and Oracle's expected return to positive free cash flow by the second half of fiscal 2028.
Oracle's latest financial results show strong top-line momentum. The company posted revenue of $19.34 billion, up 29.6% year over year, with earnings per share of $1.92 versus a $1.74 estimate. Revenue growth over the last twelve months was 21.6%, and analysts forecast roughly 34% growth for fiscal 2027. Remaining performance obligations rose by $209 billion to more than $664 billion, driven largely by a $300 billion-plus relationship with OpenAI.
However, risks complicate the story. Reports indicate Oracle lost an estimated $7 billion Tencent chip-leasing deal, and Microsoft is winding down an AI-computing arrangement because Oracle's older Nvidia chips no longer meet its needs. OpenAI's losses have increased even as revenue grows, raising questions about whether it can honor its Oracle commitments. Oracle has also faced delays at its Project Jupiter data center in New Mexico, issuing a force majeure notice over power challenges. The company recently raised $10 billion in a stock offering, with 65% going to its top 10 investors, and it plans another $20 billion debt-and-equity raise. Total debt has climbed above $174 billion.
Wall Street remains broadly positive. Stephens upgraded Oracle to Overweight with a $213 target, Scotiabank kept a Sector Outperform rating with a $205 target, and the consensus target sits near $249.27. Still, technical analysts note that ORCL trades below its 50-day average of $137.85 and 200-day average of $154.83, and an inverted cup-and-handle pattern suggests the downtrend may continue toward $100 or below. The stock's 52-week range spans from $109.21 to $250.25.
