Oracle Corp. (ORCL) has received a downward revision to its price target from UBS following a mixed earnings report, reflecting investor concerns over cloud growth and revenue performance. The move underscores shifting sentiment in the tech sector amid intensified competition.
- Oracle (ORCL) reported total revenue of $13.3 billion, slightly above consensus.
- Cloud revenue growth slowed to 11% YoY, below market expectations.
- Non-GAAP EPS of $1.12 met analyst estimates, but cloud subscription growth at 14% was tepid.
- UBS reduced price target from $140 to $125, signaling cautious outlook.
- Guidance for next quarter projects revenue growth of 8-9%.
- Market reaction was limited, with ORCL trading flat after hours.
Oracle (ORCL) reported quarterly results that delivered a split narrative, prompting UBS to lower its price target on the stock. While the company maintained strong cash flow and modest revenue growth, cloud revenue rose only 11% year-over-year, falling short of expectations. Total revenue came in at $13.3 billion, slightly above consensus estimates of $13.1 billion, but growth in the critical cloud segment lagged behind peers. The company’s subscription and support revenue, a key indicator of long-term health, grew 14%, but the pace remains below the 20%+ growth rates seen in recent quarters. The downgrade highlights market skepticism about Oracle’s ability to sustain momentum in the cloud infrastructure space, where competition from Amazon Web Services, Microsoft Azure, and Google Cloud remains fierce. Analysts note that while Oracle’s overall profitability remains healthy—GAAP net income rose 6% to $5.7 billion—the lack of acceleration in cloud adoption may limit future upside. The company’s non-GAAP earnings per share of $1.12 met expectations, but guidance for the next quarter was cautious, with projected revenue growth in the 8-9% range. The price target cut to $125 from $140 reflects a more conservative outlook, implying a potential 10% downside from current levels. This adjustment affects institutional and retail investors alike, particularly those focused on high-growth tech stocks. The reaction in the market was muted, with ORCL trading flat in after-hours sessions, suggesting the sell-off may already be priced in. However, the move could influence portfolio rebalancing ahead of the next earnings cycle. Oracle continues to invest heavily in AI-driven cloud services and database modernization, with the company emphasizing its strategic focus on enterprise clients. Still, the data suggests investor confidence is tempered by execution concerns and slowing cloud expansion.