Oracle ( (ORCL) ) has fallen by -7.47%. Read on to learn why.
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Oracle’s stock has experienced a significant decline of 7.47% over the past week, reflecting investor concerns about the company’s financial strategies and market conditions. The tech giant is reportedly considering adding $38 billion in debt to bolster its cloud and AI infrastructure, which has raised eyebrows given its existing $104 billion debt load. This move is part of Oracle’s aggressive investment in AI, with partnerships like the one with OpenAI, but it has led to skepticism as the company is currently spending more than it earns.
Despite the downturn, some analysts remain optimistic about Oracle’s long-term prospects, pointing to the company’s substantial AI backlog and potential for growth. Mizuho Securities analyst Siti Panigrahi maintains a Buy rating, suggesting that Oracle’s stock could see a significant rebound. The company’s backlog of contracted work has tripled, indicating strong demand for AI server capacity, which could translate into future revenue streams. However, Oracle’s bond values have dropped, and yields have increased, indicating nervousness among bondholders about the company’s debt strategy.
Wall Street analysts are divided on Oracle’s immediate future, but the consensus leans towards a Moderate Buy. With 25 out of 37 analysts rating the stock as a Buy, there is a belief that Oracle’s AI and cloud investments will eventually pay off, despite the current market volatility. The average price target suggests a potential upside, and if Oracle can demonstrate improved execution in its upcoming earnings report, investor sentiment might shift positively, potentially reversing the recent stock price decline.