Stifel Cuts Oracle (ORCL) Price Target After Earnings, Maintains Buy Rating

Core Viewpoint - Oracle Corporation is facing scrutiny from analysts following its Q2 earnings report, which showed lower-than-expected quarterly revenue despite strong demand for its AI infrastructure [1]. Financial Performance - Oracle reported earnings per share (EPS) of $2.26, surpassing expectations of $1.64, while revenue was $16.06 billion, slightly below the anticipated $16.21 billion [2]. - For the fiscal third quarter, Oracle projected adjusted EPS between $1.70 and $1.74, with revenue growth expected to be between 19% and 21% [3]. Analyst Insights - Stifel analyst Brad Reback lowered the price target for Oracle's stock to $275.00 from $350.00 but maintained a "Buy" rating, citing a "lackluster print" in the earnings report [1][3]. - The report indicated modest improvement in remaining performance obligations (RPO) growth of 15% quarter-over-quarter, overshadowed by higher-than-expected capital expenditure plans [3]. Capital Expenditure Concerns - Oracle increased its fiscal year 2026 capital expenditure guidance by $15 billion to a total of $50 billion, raising concerns about funding for its data center expansion [4]. - Management emphasized a commitment to maintaining an investment-grade credit rating and mentioned various funding options available [4]. Infrastructure Revenue - The Infrastructure as a Service (IaaS) revenue was estimated at $4.1 billion, meeting but not exceeding expectations, with EPS, excluding the Ampere benefit, appearing to be 10-15 cents below guidance [5]. Future Growth Potential - Despite near-term concerns, analysts believe that current capital investments will likely support accelerating growth in Oracle Cloud Infrastructure (OCI) in the coming quarters, driven by an expanding and diverse IaaS customer base [6].