Summary

• Oracle is rated a buy, down from strong buy, reflecting high CapEx needs and updated scoring model adjustments.
• Q3 revenues grew 22% to $17.2B, with cloud sales up 44% and AI infrastructure revenues surging 243%, but at lower gross margins.
• ORCL’s capital expenditures are flexible; while free cash flow is negative now, CapEx can be adjusted if demand softens.
• Valuation offers ~33% upside to a $250.22 price target, with sales and EBITDA expected to grow over 30% annually despite near-term leverage concerns.
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In December, I reiterated my strong buy rating for Oracle Corporation (ORCL). It is the second time I marked the stock a strong buy, and for the second time, the stock also declined following my strong buy

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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