Oracle stock drops 7% as company’s AI conference brings out skeptics
Oracle’s A long rally driven by the company’s increasingly central position in the AI boom faltered on Friday, sending the stock down 7%, its worst day since January.
The slide came a day after the software company laid out a long-term outlook powered by artificial intelligence at an analyst meeting that was part of the Oracle AI World conference in Las Vegas.
Oracle said Thursday it expects cloud infrastructure revenue to grow from $18 billion in fiscal 2026 to $166 billion in fiscal 2030. The company currently sees adjusted earnings per share of $21 on total revenue of $225 billion in fiscal 2030, representing annual sales growth of over 31%.
Initial reaction was positive. Oracle shares rose 3.1% on Thursday, continuing a rally that has increased the company’s market value by more than 160% in two years.
But some doubt emerged Friday as some analysts questioned Oracle’s ability to achieve its big goals.
““The stock looks like it could have some breathing room here as investors digest these numbers and try to gain comfort about the availability of long-term numbers. Jaluria recommends holding the stock,” RBC Capital Markets analyst Rishi Jaluria told CNBC’s Seema Mody in an email.
Oracle did not respond to a request for comment.
Oracle has emerged as one of the biggest beneficiaries of the AI infrastructure boom. It recently announced a five-year deal with OpenAI worth more than $300 billion to provide access to AI chips. Following its earnings report in September, the stock had its best day since 1992 when the company announced it had $455 billion in remaining performance liabilities, up 359% from the previous year.
Oracle on Thursday confirmed a cloud deal with Meta, saying it signed $65 billion in cloud infrastructure commitments this quarter. Oracle also said adjusted gross margin on AI infrastructure will be higher than some analysts expected, between 30% and 40%.
UBS analyst Karl Keirstead raised his price target to $380 from $360 in a note on Friday, saying the stock price does not reflect all the positive aspects of the company’s AI-powered momentum. Shares closed at $291.31 on Friday.
In recommending buying the stock, Keirstead noted a few things that “more cautious voices” would consider in a “bear scenario.” These include the risk of work being concentrated on OpenAI and the “various unforeseen go-live bottlenecks” that can come with such an aggressive structure, he wrote.
Oracle’s tone remains extremely optimistic. Clay Magouyrk, who was named one of Oracle’s two CEOs last month, told the conference that this quarter’s commitments were met by “seven different contracts from four different customers.”
“None of these customers are OpenAI,” Magouyrk said. “I know some people sometimes question: ‘Hey, is it just OpenAI?’ “The truth is, we think OpenAI is a great customer, but we have a lot of customers.”
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