Oracle’s (ORCL) Earnings Could Reset Investor Sentiment, Analysts Say

Core Viewpoint - Oracle Corporation (NYSE:ORCL) is positioned as a significant player in the AI stock market, with TD Cowen maintaining a "Buy" rating and a price target of $400 ahead of its Q2 earnings report on December 10 [1]. Group 1: Growth Factors - Two key factors are identified that could reverse negative sentiment around Oracle's stock: acceleration in Oracle Cloud Infrastructure (OCI) growth and clarification on capital expenditure and financing needs [2]. - The upcoming Q2 earnings report is expected to reset negative investor sentiment and reinforce Oracle's long-term OCI growth narrative, with growth momentum anticipated to build in the second half of the year as the Abilene data center becomes operational [3]. Group 2: OCI Growth Projections - The second quarter is projected to mark the beginning of OCI growth acceleration, with expectations of growth rates moving from approximately 51-54% over the last four quarters to around 65% in Q2, 80% in Q3, and 100% in Q4 [5]. - The construction of a "Stargate" data center in collaboration with OpenAI is on track, which will help address capacity concerns and meet the backlog in Oracle's cloud infrastructure business [4]. Group 3: Capital Expenditure Insights - Current valuations are viewed as being at "trough" levels, suggesting significant upside potential, while capital expenditure and debt leverage remain critical areas to monitor [5]. - A lower than expected capital expenditure could lead to reduced debt needs, addressing investor concerns regarding financing requirements during the upcoming earnings call [5].