RBC Capital lowered its price target on Oracle to $195 from $250. The firm maintained a 'Sector Perform' rating. Analysts view 2026 as a pivotal year for the company's AI initiatives, citing increasing caution surrounding Oracle’s massive, debt-funded investment in AI data centers.
The downgrade follows a debate over Oracle's strategy, which has driven a significant increase in capital expenditures. CapEx is expected to reach $50 billion for fiscal 2026. This aggressive spending resulted in negative free cash flow during the last quarter.
Oracle boasts $523 billion in remaining performance obligations, fueled by major cloud deals. However, concerns persist regarding the financial risks of the aggressive buildout. Analysts warn of a potential "AI hangover" as market expectations confront execution realities.
Oracle's stock declined on January 8. The movement was influenced by the analyst downgrade and a wider market rotation out of the technology sector. Technical indicators further compounded the negative sentiment, with the stock forming a "death cross," a pattern viewed as bearish.