Oracle’s AI Ambitions Fuel Wall Street’s Divided Outlook

The battle for dominance in artificial intelligence infrastructure has created a sharp divide among market experts regarding Oracle’s prospects. While the technology giant positions itself as a critical player in the cloud computing arms race, financial institutions remain deeply split on whether its current valuation reflects sustainable growth or speculative excess.

Explosive Growth Metrics Counter Bearish Sentiment

Despite conflicting analyst opinions, Oracle’s operational performance demonstrates remarkable momentum. The company’s remaining performance obligations skyrocketed by 359% to reach a staggering $455 billion, indicating substantial future revenue visibility from its cloud infrastructure business.

Oracle Cloud Infrastructure (OCI) revenue expanded by 54% during the most recent quarter, reaching $3.3 billion. Management has established ambitious targets of $18 billion in OCI revenue for fiscal year 2026, with an even more aggressive long-term goal of $144 billion by 2030.

This growth narrative is underpinned by substantial infrastructure investments: 34 operational multi-cloud data centers, specialized GPU superclusters tailored for AI training workloads, and strategic collaborations with industry leaders including OpenAI and Meta Platforms.

Rothschild’s Contrarian Sell Recommendation Creates Waves

The investment firm Rothschild Redburn initiated coverage on Oracle with a rare sell rating, establishing a price target of just $175 per share. This pessimistic assessment represents a significant deviation from the stock’s current trading levels and suggests concerns about overheated valuations within the cloud sector.

The firm expressed fundamental doubts about the sustainability of cloud revenue streams and questioned whether current market prices accurately reflect long-term growth prospects. This bearish perspective contributed to noticeable selling pressure in recent trading sessions.

Should investors sell immediately? Or is it worth buying Oracle?

Bullish Counterpoints from Major Institutions

Several prominent financial institutions maintain optimistic positions on Oracle’s trajectory:

Key Bullish Stances:
– Bernstein raised its price target to $364 with an “Outperform” rating
– TD Cowen increased its target to $375 while maintaining a “Buy” recommendation
– RBC Capital reaffirmed its $310 target ahead of the upcoming Analyst Day
– UBS maintained its $364 price projection

Insider Transactions Add to Uncertainty

Additional pressure emerged from insider trading activity. Director Naomi Seligman disposed of shares valued at approximately $642,000 in late September. Such transactions are frequently interpreted by institutional investors as potential signals regarding near-term price expectations.

Valuation Concerns Amid Technical Weakness

Oracle shares are currently experiencing their most prolonged declining streak since January 2022. After reaching peaks above $345 in September, the subsequent correction reflects both profit-taking behavior and valuation apprehensions.

With a forward price-to-earnings ratio hovering around 54, the valuation appears ambitious by traditional metrics. However, proponents of the AI infrastructure thesis argue that exceptional demand growth justifies premium valuation multiples.

The upcoming Oracle AI World conference and Analyst Day on October 16 represents a critical event for the company. Management faces the challenge of presenting new long-term objectives and demonstrating concrete progress in customer partnerships to alleviate valuation concerns currently weighing on investor sentiment.