Melius Downgrades Oracle (ORCL) to Hold as AI Monetization Faces Scrutiny

Core Viewpoint - Oracle Corporation (NYSE:ORCL) is facing scrutiny regarding its AI monetization and has been downgraded from Buy to Hold by Melius analyst Ben Reitzes, with a price target maintained at $160 [1][5]. Group 1: Financial Performance and Valuation - Melius highlighted concerns over Oracle's weak cash generation and high debt levels, which may impact the stock's performance in the near term [2]. - The company's enterprise value to free cash flow ratio is noted as "NA," indicating that value may be absorbed by debt and potential new stock issuances for some time [2]. - Reitzes suggested that Oracle should be valued more like an infrastructure company rather than a traditional software company [2]. Group 2: Market Position and Investment Potential - While Oracle has potential as an investment, Melius believes that other AI stocks may offer greater upside potential with less downside risk [3]. - The firm is cautious about the challenges ahead for Oracle, despite acknowledging Larry Ellison's ambitious initiatives [2].