Analysts Issue a Key Warning on Oracle Stock: Sell Now

Core Viewpoint - Oracle is experiencing significant stock price appreciation, but concerns about its high valuation and growth sustainability are emerging as analysts express mixed sentiments about its future prospects [4][5][16]. Financial Performance - Oracle reported a 12% year-over-year revenue increase to $14.9 billion in the latest fiscal first quarter 2026, with cloud sales rising 28% to $7.2 billion [8]. - Infrastructure revenue surged 55% to $3.3 billion, while SaaS applications generated $3.8 billion, an 11% increase [8]. - GAAP EPS decreased by 2% to $1.01, whereas non-GAAP EPS increased by 6% to $1.47 [8]. - Remaining performance obligations reached $455 billion, marking a significant 359% increase [8]. Valuation Concerns - Oracle's forward P/E ratio stands at 59.70x, significantly higher than the sector average of 25.10x, indicating that investors are paying a premium for anticipated growth [2][16]. - Rothschild downgraded Oracle's stock to "Sell," suggesting that the market may be overestimating its growth potential, especially in light of its role in large-scale AI projects [5][14]. Market Position and Growth Strategy - Oracle is transitioning to a cloud-first model with a focus on infrastructure and AI, which has contributed to a stock price increase of 66.82% over the past year [3]. - The company is securing multi-billion-dollar contracts and rapidly expanding its AI infrastructure, although it faces stiff competition from industry leaders like Amazon Web Services and Microsoft Azure [6][7]. Analyst Sentiment - Despite Rothschild's caution, the consensus among 38 analysts remains a "Moderate Buy," with an average price target of $332.06, suggesting a potential upside of 17% from current levels [15]. - Analysts forecast earnings of $1.30 per share for the current quarter, reflecting a 13.04% increase from the previous year, and project full-year earnings of $5.38 for fiscal 2026, a growth of 22.27% [13].