Oracle Corporation (NYSE:ORCL) is one of the AI Stocks in the Spotlight for Investors. On December 11, UBS analyst Karl Keirstead lowered the price target on the stock to $325.00 (from $380.00) while maintaining a “Buy” rating. The firm remains constructive on the stock despite mixed earnings results driven by Oracle’s $523B backlog conversion.
According to the firm, Oracle’s earnings released on December 11 fell slightly short of investor estimates. However, it remains optimistic regarding the company’s massive deal backlog deal, anticipating it to drive strong revenue growth.
“Oracle posted 2Q/Nov results (13% c/c revs growth, 66% cloud infra growth) that fell slightly short of investor estimates, as did the messaging around leverage/financing, but in our view the conversion of the massive $523b deal backlog to high revs growth in 2H/FY27 is compelling enough that we’re sticking with our Buy rating.”
Unlike three months ago, the stock is no longer reacting to incremental backlog growth. This is despite a significant $68 billion increase in remaining performance obligations during the quarter, driven by deals with Meta and Nvidia. Investors would rather like to see higher backlog and capital spending translation into revenue.
“Investors need to see higher backlog and capex convert to revs, and total revs growth of 13% was in-line (albeit up from 9% a year ago), cloud infra growth of 66% was a shade light (we were modeling 68%), SaaS growth of 11% fell short of Oracle’s guide for an accel and the 3Q/Feb guide for 37–41% Cloud revs growth was a bit short of our 42% estimate.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
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