Oracle's cloud catch-up: What's behind Oracle's stock reaction

Core Viewpoint - Oracle's stock is experiencing a decline despite positive long-term forecasts, including projected cloud sales of $166 billion by fiscal year 2030 and a deal backlog exceeding $500 billion [1][2]. Financial Performance - Earnings guidance suggests a dip in margins in 2028 before a recovery into 2030, indicating potential short-term challenges related to data center buildouts [3]. - Gross margins are expected to be in the 30% to 40% range by 2030, which is higher than market consensus [2][10]. Market Position - Oracle's record backlog in cloud contracts positions it ahead of competitors like Amazon, Microsoft, and Google, showcasing its significant progress in cloud infrastructure [4]. - The company has secured $65 billion in new commitments over the past 30 days, including partnerships with OpenAI and Meta [5]. Competitive Landscape - Oracle's founder, Larry Ellison, emphasized the company's comprehensive approach to cloud services, contrasting it with competitors who primarily function as tech platforms [6]. - Analysts express skepticism about Oracle's long-term attractiveness as AI training costs decline, suggesting that the industry may lean towards Microsoft and Amazon for inference [5]. Analyst Sentiment - Despite the stock's decline, analysts have not adjusted price targets downward, with some increasing targets, indicating continued confidence in Oracle's long-term prospects [9].