Why Oracle Fell Hard Today

Core Viewpoint - Oracle's shares experienced a significant decline of up to 8.1% following its Investor Day presentation, despite the company providing impressive long-term guidance for 2030, indicating a potential "sell the news" reaction from investors [1][9] Group 1: Financial Performance and Projections - Oracle reported a massive 359% growth in its cloud RPO, reaching $455 billion, primarily driven by a contract with OpenAI [2] - The company anticipates gross margins between 30% and 40% on its large cloud infrastructure deals, which is higher than previous fears, and projects $225 billion in revenue by 2030, with approximately $166 billion expected from its cloud infrastructure unit [4] - Despite these positive projections, Oracle's stock trades around $291 per share, reflecting a valuation of 13.9 times the projected 2030 earnings, which some analysts consider strikingly cheap [5] Group 2: Market Reactions and Analyst Sentiment - Investors expressed skepticism regarding Oracle's ambitious projections and the concentration of revenue from OpenAI, with concerns about the current 14% gross margin on cloud infrastructure services [3][6] - Following the Investor Day, analysts from Guggenheim and T.D. Cowen raised their price targets for Oracle to $400, up from $375, indicating a positive outlook despite the stock's decline [8]