Oracle (NYSE:ORCL) investors woke up to a rough day, with the stock tumbling about 13% as the company’s latest quarterly report landed with a thud. On the surface, Oracle delivered double-digit revenue growth and another solid jump in cloud sales, but the details told a far less comfortable story.
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A mix of underwhelming execution and rising costs set the tone for the sell-off. Oracle has been positioning itself as a major AI-infrastructure player, pouring billions into datacenter expansion to meet growing GPU-as-a-Service demand. But the market wanted reassurance that these investments are paying off quickly and profitably. Instead, revenue came in lighter than anticipated, cloud growth failed to hit the top of the guided range, and margins took a hit. The company is spending aggressively, yet not producing the kind of operating leverage investors expected at this stage of the AI cycle.
Interestingly, one billionaire may have read the situation early. David Tepper, the influential investor behind Appaloosa Management, had been easing out of Oracle for more than a year, starting from a position of about 2.3 million shares in Q1 2024. He steadily trimmed that stake quarter after quarter and ultimately sold his remaining 150,000 shares in Q3 2025. Nothing in Tepper’s commentary suggested he predicted a collapse, but in the light of today’s drop, his steady retreat now looks, at the very least, well-timed.
The concerns that weighed on Tepper’s conviction find a clear echo in Morgan Stanley’s Keith Weiss, who didn’t mince words about the mood around Oracle. In his view, “Cloud growth at the low-end of the guide with building pressure on gross margins and op margins may further sap investor confidence in ORCL’s ability to execute efficiently” as it tries to scale its GPU-as-a-Service business. The analyst added that, as things stand, the shares are “lacking a clear catalyst.”
Weiss also suggested that the market’s harsh reaction says something deeper about sentiment. The analyst believes that investors “may be increasingly losing confidence in Oracle’s ability to convert this large (and still expanding) backlog into durable, profitable, revenue streams.” In his view, the quarter raised fresh doubts about the quality and reliability of the growth Oracle is promising.
Looking ahead, Weiss expressed concern that some of Oracle’s recent financing and chip-sourcing strategies “sap confidence that Oracle can achieve compelling economics” on its AI-infrastructure ambitions. And he warned that before investors can fully buy into Oracle’s long-term targets, “greater confidence” is needed that the GPUaaS business will actually lift earnings and free cash flow – not weigh them down.
With that rising uncertainty, Weiss put his price target and estimates “under review,” while assigning ORCL an Equal-weight (i.e., Neutral) rating. (To watch Weiss’ track record, click here)
As for the broader analyst community? The Street remains cautiously optimistic. ORCL carries a Moderate Buy consensus rating based on 35 reviews, broken down into 23 Buys, 11 Holds, and 1 Sell. The average price target of $346.11 suggests potential upside of 55% from yesterday’s close. (See ORCL stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.