Morgan Stanley Cuts Oracle's Price Target by 33% to $213 Amid AI Infrastructure Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 23 2026
0mins
Should l Buy ORCL?
Source: seekingalpha
- Earnings Downgrade: Morgan Stanley analysts have lowered Oracle's fiscal 2028 EPS forecast to $8.51, significantly below Oracle's target of $10.65, indicating concerns over the company's profitability that may affect investor confidence.
- Surging Capital Expenditures: Analysts project Oracle's cash capital expenditures will reach $275 billion from FY26 to FY28, far exceeding the consensus estimate of $189 billion, highlighting the substantial investment needs in AI infrastructure that could increase financial pressure.
- Rising Debt Risks: Morgan Stanley forecasts Oracle's gross adjusted debt to exceed $400 billion with leverage over 5x, a risk not reflected in current bond spreads, potentially impacting the company's credit rating and financing capabilities.
- Strong Customer Commitments: Despite the earnings downgrade, Oracle has secured a monumental backlog of contracted customer commitments totaling $426 billion, with approximately $300 billion stemming from AI compute infrastructure clients, indicating robust market demand in the AI sector and high visibility over the next five years.
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Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 145.230
Low
180.00
Averages
309.59
High
400.00
Current: 145.230
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Debt Pressure: To complete its AI data center build-out, Oracle needs to raise up to $50 billion in debt, raising concerns among investors about its financial health, especially given the weak margins in its data center business.
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- Debt Pressure: To complete its AI data center build-out, Oracle needs to raise up to $50 billion in debt, raising concerns among investors about its financial health, especially given the weak margins in its data center business.
- Analyst Optimism: Despite challenges, Guggenheim analyst John DiFucci remains bullish on Oracle, setting a price target of $400, suggesting nearly 170% upside, reflecting confidence in its cloud infrastructure and database technology.
- OpenAI Financing Boost: OpenAI's successful $120 billion private financing round enhances market confidence in its future infrastructure commitments, positively impacting Oracle's AI business outlook and potentially alleviating investor concerns.
See More
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- Uncertain Market Environment: While Oracle's P/E ratio of 25.1 is lower than the Nasdaq-100's 29.9, suggesting its stock may be undervalued, the high debt and customer reliance make it prudent for investors to exercise caution amid market instability.
See More
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- ETF Trading Mechanism: Exchange-traded funds (ETFs) trade like stocks, where investors are buying and selling 'units' that can be created or destroyed based on investor demand, impacting liquidity and market performance.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding helps identify ETFs experiencing notable inflows (new units created) or outflows (old units destroyed), assessing their potential impact on underlying assets.
See More
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- Lower Borrowing Costs: The refinancing actions reduced the all-in spread by 15 basis points on the revolving credit facility and the $400 million term loan, and by 30 basis points on the $100 million term loan, which will help improve the company's profitability through lower financing costs.
- Significant Leasing Momentum: The company secured a long-term lease of 116,000 square feet with Oracle at its Neuhoff mixed-use development in Nashville, marking a notable step in leasing momentum that not only enhances cash flow visibility but also attracts a high-credit technology tenant.
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See More
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- False Statement Allegations: The complaint alleges that Oracle made false and misleading statements regarding its AI infrastructure strategy, claiming that massive capital expenditures would not yield near-term revenue growth, thereby increasing risks related to debt and credit ratings.
- Investor Losses: As the market learned the truth about Oracle, investors suffered damages, indicating that the company's public statements during the class period were false and materially misleading, potentially leading to a decline in investor confidence.
- Legal Consultation Opportunity: The Schall Law Firm offers legal consultation for investors worldwide, encouraging affected shareholders to actively participate in the lawsuit before certification to protect their rights and seek compensation.
See More
