Oracle’s Supply Chain Pivot Sparks a $225 Vote of Confidence From Wedbush

A cancelled order worth more than a billion dollars sent Oracle’s stock into a tailspin on Thursday, but the episode is being reframed as a routine supplier adjustment rather than a crack in the company’s AI expansion narrative. Within 24 hours, Wedbush Securities stepped in with an “Outperform” rating and a $225 price target, helping the shares claw back some of the losses by Friday’s close.

The Super Micro Fallout

The selloff was triggered by reports that Oracle had scrapped an order for 300 to 400 Nvidia GB300 NVL72 racks from server manufacturer Super Micro Computer. Bluefin Research estimated the contract’s value at roughly $1.1 billion to $1.4 billion, with between 100 and 200 racks already delivered before the cancellation took effect. The stock dropped approximately 6 percent on the news.

Market observers linked the decision to a compliance headache: Super Micro co-founder Wally Liaw faces allegations of illegally shipping chips to China. Oracle, keen to distance itself from the controversy, reportedly shifted the rack order to Taiwanese manufacturer Wiwynn. Analysts were quick to argue that the move reflects a supplier rotation within an ongoing expansion program, not a retreat from capital spending.

Wedbush’s Bullish Bet

The following day, Wedbush initiated coverage with a $225 price target, calling Oracle an underappreciated infrastructure provider in the AI arms race. The firm highlighted Oracle’s strategic partnerships with OpenAI and Nvidia, arguing that the market is overstating the risks tied to the current investment cycle. The stock edged roughly 1 percent higher in pre-market trading on the back of the endorsement.

Oracle’s broader cloud strategy also gained visibility during the week. The company introduced an AI database agent for Gemini Enterprise in partnership with Google Cloud, enabling natural-language access to Oracle data. The move complements the previously announced AWS integration and underscores Oracle’s push into a multicloud world.

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

Record Backlog Meets a Mountain of Debt

The fundamental picture remains a study in contrasts. In the third fiscal quarter, Oracle reported that demand for cloud infrastructure continues to outstrip supply. Remaining performance obligations hit $553 billion — a 325 percent surge year-over-year — underpinned by blockbuster contracts with OpenAI, Meta, and xAI. Cloud infrastructure revenue alone jumped 84 percent to $4.9 billion.

For fiscal 2026, Oracle plans to raise between $45 billion and $50 billion to expand capacity for clients including Nvidia, xAI, and Meta. The company insists that a significant portion of its capital outlays is funded by customer prepayments or directly provided hardware, reducing the strain on its own balance sheet.

Yet the liabilities side tells a less comfortable story. Long-term debt has climbed to $124.7 billion, while interest costs rose 32 percent to $1.18 billion. Free cash flow on a trailing basis remains deeply negative, driven by $48.25 billion in capital expenditures. Bulls see this as a strategic pre-investment backed by a $553 billion order book; skeptics question when those contracts will translate into actual revenue.

Analyst Divergence

The consensus among roughly 40 analysts points to an average price target of $260.71, with a wide range of $160 to $400. Mizuho recently trimmed its target to $320 while maintaining an “Outperform” rating, and Guggenheim holds firm at $400. The stock closed Friday at €147.22 in Frankfurt — roughly 48 percent below its 52-week high but about 27 percent above the February trough.

Management has lifted its fiscal 2027 revenue forecast to $90 billion and projects $144 billion in Oracle Cloud Infrastructure revenue over five years, noting that the bulk of that figure is already embedded in the reported backlog. How efficiently Oracle converts that backlog into earnings will likely determine the stock’s trajectory in the second half of the year.