Oracle stock sentiment 'has quickly deteriorated.' Can earnings brighten the mood?

By Emily Bary

One analyst expects the company will provide an update on financing needs that could show they're 'less demanding' than what Wall Street fears

Oracle reports earnings on Dec. 10.

Many artificial-intelligence companies are getting some benefit of the doubt from Wall Street, even though it's not clear whether their AI opportunities will fully manifest. But not Oracle, whose shares have more than given back all their big gains sustained in the wake of an upbeat forecast issued about three months back.

When it comes to Oracle (ORCL), investors are specifically concerned about the debt financing required for the company's AI build-out, set against a somewhat uncertain demand backdrop. Much of the company's expansive backlog ties back to OpenAI, but investors aren't sure the ChatGPT creator will be able to follow through or pay for all its promised business.

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Citi analyst Tyler Radke, though, said the "concerns around Oracle's debt health" are "overstated," adding that he is looking ahead to the company's earnings report on Dec. 10 and expects it to bring "more evidence that AI infrastructure demand is broad-based with another strong bookings number."

The company could show off a refreshed nine-figure number for remaining performance obligations, he added - a measure of contracted revenue that hasn't yet been recognized as revenue. It was $455 billion in the fiscal first quarter, but Oracle has since noted that the metric has been growing by about $2 billion a day, meaning that Radke's estimate of about $600 billion may be conservative.

That said, the company's revenue and profit metrics for the fiscal second quarter could wind up at the low end of the company's guidance, but not because of demand issues. Rather, Oracle, like other cloud players, is dealing with capacity constraints as it scrambles to get enough computing power.

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TD Cowen's Derrick Wood wrote of "key factors" that could "reverse recent sentiment headwinds."

In his view, the fiscal second quarter could be the first one to show a "liftoff" in growth of the Oracle Cloud Infrastructure business, and acceleration can build from there into the second half of the fiscal year.

Plus, Wood said, Oracle will "give more color around [capital-expenditure]/financing needs, which we think is less demanding than consensus thought."

He flagged that Oracle shares are now about 15% below where they traded before the fiscal first-quarter report. "While concerns around [OpeanAI] having stretched commitments will likely persist, we think there could be some needed air cleared around capex/debt demands," Wood wrote.

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-Emily Bary

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12-04-25 0934ET