Oracle Stock Punished Further By OpenAI Fears As Analysts Offer Opposing Takes

Core Viewpoint - Oracle's stock has experienced significant volatility, with a notable decline of over 20% in November and further losses into December, raising concerns about its future performance and funding strategies related to its cloud deals with OpenAI [1][2][3]. Financial Performance - In September, Oracle's stock surged due to a 359% increase in remaining performance obligations, reaching $455 billion, which included a $300 billion cloud infrastructure deal with OpenAI [2]. - However, by mid-October, investor sentiment shifted as concerns arose regarding Oracle's ability to finance the necessary data-center buildout to support AI demand [2]. Analyst Perspectives - Deutsche Bank analyst Brad Zelnick maintains a bullish outlook on Oracle, reiterating a buy rating with a price target of 375, citing strong earnings and revenue growth outside of OpenAI's contributions [4]. - Conversely, CFRA analyst Angelo Zino downgraded Oracle to neutral, highlighting the company's debt exceeding $100 billion and projecting negative free cash flow for the next three fiscal years [7]. - D.A. Davidson analyst Gil Luria expressed concerns about the risks associated with OpenAI's obligations, indicating that the market perceives Oracle as having over-leveraged for uncertain customer commitments [8][9]. Stock Performance - Oracle's stock closed near 201.30, remaining below its 200-day moving average, indicating a bearish trend [10]. - The company is expected to address investor concerns with its fiscal second-quarter results scheduled for December 15 [10]. Market Position - Oracle holds an IBD Composite Rating of 60 out of 99, suggesting it is below the threshold of top growth stocks, which typically have ratings of 90 or better [11].