Morgan Stanley revamps Oracle stock price target

Oracle (ORCL) is a tech giant. Its revenue sources are enterprise software, cloud services, and database technologies. Oracle Cloud Infrastructure (OCI) unit has become the primary driver of the stock’s growth, thanks to the AI boom.

On top of everything you’d expect in their offerings, the company also has something special: Oracle Compute Cloud@Customer Isolated. A very complicated name for an “on-premises cloud.” The target audience of this product is governments and regulated industries.

Oracle was recognized by Bank of America last October as the fourth AI infrastructure hyperscaler.

The stock closed at $173.28 on April 26, representing a 47.22% loss from its highest closing price of $328.33 on September 10, according to Yahoo Finance.

This drop was predicted by Rothschild & Co. Redburn’s analyst Alex Haissl. Haissl initiated coverage of Oracle in September 2025, setting a $175 price target and a sell rating.

Considering that the stock has dropped below his price target, even he may have been a tad optimistic.

Morgan Stanley lowered Oracle’s stock price target.

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Key news for Oracle stock

On March 6, Bloomberg reported that Oracle and OpenAI had dropped plans to expand an AI data center in Texas.

Oracle refuted the claims from the report in a post on X:

“Recent media activity about the Abilene site [is] false and incorrect. First, Crusoe and Oracle are operating in lockstep to deliver one of the world’s largest AI Data centers in Abilene at [a] record-breaking pace. Two buildings are completely operational, and the rest of the campus is on track. Second, Oracle has completed leasing for the additional 4.5GW to deliver on our commitments to OpenAI.”

Oracle gained $100 billion in market cap after announcing an expanded partnership with Amazon Web Services (AMZN) on April 16.

The company canceled a huge order of Nvidia GB300 NVL72 racks from Super Micro Computer (SMCI). This was a contract estimated at $1.1 billion to $1.4 billion.

Oracle laid off 20,000 to 30,000 employees, according to Forbes on April 6.

TD Cowen warned in January that this was what the company would likely do to resolve its AI datacenter financing challenges, according to The Register.

Key issues with Oracle Q3 earnings

Oracle reported its Q3 results on March 10. The company touted its Remaining Performance Obligations (RPO) of $553 billion, up 325% year-over-year. This might sound great until we look at deferred revenues.

In Q3, short-term deferred revenues were $9.9 billion. But if we go back to the Q2 report, RPO was at $523 billion, and short-term deferred revenues were also $9.9 billion. The RPO keeps growing, but deferred revenue isn’t, and the gap between the two is glaring. Meanwhile, the company’s debt is skyrocketing.

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The company disclosed the following in its FORM 10-Q filing: “Based on the trading prices of the $130.9 billion and $90.3 billion of senior notes and other long-term borrowings and the related fair value hedges, if any, that we had outstanding as of February 28, 2026 and May 31, 2025, respectively, the estimated fair values of the senior notes and other long-term borrowings and the related fair value hedges, if any, using Level 2 inputs at February 28, 2026 and May 31, 2025 were $118.4 billion and $81.3 billion, respectively”

This growing debt comes along with $261 billion in additional lease commitments, as stated in the same filing.

A significant part of RPO is supposed to come from OpenAI, and we know that part is at least $300 billion, which translates to 54% of RPO.

Relying on OpenAI for that much revenue is a big risk, as the company isn’t profitable.

Morgan Stanley lowers Oracle stock price target

Morgan Stanley analyst Keith Weiss and his team updated their opinion on Oracle stock in their research note from April 23.

The team said that while Q3 results were strong on topline and operating profitability, gross margins ticked approximately 590bps lower year-over-year. This drop was due to the capacity ramp for GPU-as-a-Service (GPUaaS).

Related: Bank of America resets Google stock forecast ahead of earnings

Analysts believe this will continue given that the company is in the early stage of its data center buildout. They noted that Oracle’s customer concentration is a key risk, but they believe recent data points and ecosystem developments are constructive.

The team raised their fiscal year 2027 and 2028 Cloud Database Estimates by 3% and 15%, respectively.

In a research note shared with me, Weiss reiterated an equal-weight (hold) rating for Oracle stock and lowered the price target to $207 from $213, based on a 25 multiple of his estimate for non-GAAP EPS for fiscal year 2028 of $8.28.

Along with the base case for Oracle’s stock, Morgan Stanley’s bear case shows a price target of $75.00. They wrote: “Our bear case assumes Oracle below historical averages given lack of confidence towards accelerating EPS growth in the out years as GPUaaS opportunity falls meaningfully short of expectations.”

Analysts noted downside risks for Oracle stock:Challenges in ramping up OCI capacity.Weaker than expected OCI gross margins.GPUaaS capacity investments drive substantial leverage.Disruptive technologies in the data management market.Upside potential for Oracle:Faster than expected OCI capacity ramps.Stronger than expected OCI gross margins.Accelerated adoption of Fusion Apps and Cloud.Database across the installed base.Accelerated market share gains in non-AI Cloud.

Related: Bank of America resets Intel stock price target after earnings

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