Key Stats for Oracle Stock
- Price Change from 52-week high for $ORCL stock: -16%
- Current Share Price: $277
- 52-Week High: $346
- $ORCL Stock Price Target: $345
What Happened?
Last Friday, Oracle (ORCL) stock suffered its worst single-day decline since January, plunging 7% after investors took a step back to digest the software giant’s ambitious long-term targets unveiled at its AI World conference in Las Vegas.
The selloff came despite an initially positive reaction on Thursday when shares rose 3% following the company’s financial outlook presentation.
At the analyst meeting, Oracle laid out stunning projections for fiscal 2030. It expects cloud infrastructure revenue to explode from $18 billion in fiscal 2026 to $166 billion by 2030.
Total revenue is projected to surpass $225 billion with adjusted earnings of $21 per share. That implies annualized sales growth exceeding 31% over the next five years.
If Oracle hits these targets, revenue and earnings per share would grow nearly 4x in just five years, the fastest organic growth in over 15 years.
CFO Doug Kehring noted that among S&P 500 companies with more than $50 billion in revenue, fewer than five are growing faster than Oracle over the next 12 months.
But Friday’s decline suggests investors are questioning whether these projections are achievable. RBC Capital Markets analyst Rishi Jaluria, who rates the stock a hold, told CNBC the stock may need “a bit of a breather” as investors digest the numbers and assess achievability.
The skepticism centered on execution risk, given the massive infrastructure buildout required.
Oracle recently announced a five-year deal with OpenAI worth over $300 billion to provide AI chip access. In September, Oracle reported remaining performance obligations of $455 billion, up 359% year-over-year.
That backlog provides visibility into future revenue, though converting that backlog into actual revenue depends on executing data center builds quickly.
CEO Clay Magouyrk addressed concentration concerns by revealing that Oracle signed $65 billion in new cloud infrastructure commitments during the current quarter across seven contracts from four different customers.
Importantly, none of those customers were OpenAI. Magouyrk emphasized that Oracle has many large customers beyond OpenAI, countering worries that the growth story relies too heavily on one relationship.
Oracle also disclosed that AI infrastructure gross margins would range between 30% to 40%, higher than some analysts expected.
The company provided detailed examples showing how it aligns revenue and expenses during data center ramp periods.
Management stressed it only pursues opportunities with clear profit visibility that reward Oracle’s intellectual property.
See analysts’ growth forecasts and price targets for Oracle stock (It’s free!) >>>
What the Market Is Telling Us About ORCL Stock
The ongoing ORCL stock selloff reflects nervousness about Oracle’s ability to execute such aggressive targets despite the strong demand backdrop.
UBS analyst Karl Keirstead, who raised his price target to $380, acknowledged “more cautious voices” would focus on concentration risk with OpenAI and potential go-live bottlenecks from such an aggressive buildout.
Oracle stock has surged over 160% in two years, with much of that gain driven by AI enthusiasm. The 7% decline on Friday suggests profit-taking after the Thursday pop, as some investors question whether expectations have gotten ahead of reality.
Reaching $225 billion in revenue by 2030 requires flawless execution on data center construction, securing power and land, maintaining gross margins during rapid scaling, and continuing to sign massive customer contracts.
However, the underlying AI demand story remains intact, given that Oracle’s remaining performance obligations exceeded $500 billion. Now, it is essential for Oracle to build capacity fast enough to convert backlog into revenue at the projected pace.
Having four different customers sign $65 billion in commitments in one quarter shows broad-based demand.
But it also highlights the capital intensity required to serve these customers, which will pressure free cash flow in the near term even as it drives long-term growth.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!