Oracle's stock is trading at a very extreme discount to this key technical indicator

By Christine Ji

Shares of Oracle are trading at a steep discount to their 200-day moving average as Wall Street doubts the company can hit its ambitious 2030 financial targets

Oracle has guided for $225 billion in revenue and $21 of earnings per share in fiscal 2030.

Oracle's stock has been on a prolonged slide since last fall as investors have questioned the company's ambitious artificial-intelligence business strategy.

Fears that Oracle (ORCL) is overspending on AI have dragged the stock to extremely cheap levels relative to its 200-day moving average. Shares of Oracle closed Tuesday at a 34% discount to the 200-day moving average, which is a key technical indicator that represents long-term market trends for a security and is calculated by taking the average of the closing prices of the trailing 200 days.

That's a notable discount, though not quite as extreme as when Oracle's stock closed 38% below its 200-day moving average in early February. That was the farthest it's been off its 200-day moving average since 2002, according to Dow Jones Market Data.

Oracle's stock currently trades near $145. It's fallen 25% so far this year and is off nearly 60% from its September high.

The stock has "found support" in the $140 range in the past two months, meaning that, near those levels, it hit a price floor that eased selling pressure, Jefferies equity trader Jeffrey Favuzza wrote in a Wednesday note. Oracle's stock got a bit of a boost last week after reports said the company was conducting mass layoffs - a potential positive offset to the company's heavy AI spending.

Oracle shares are also rising Wednesday along with broad market momentum reflecting enthusiasm for Trump's two-week cease-fire deal with Iran.

Read: Oracle's stock rises as company reportedly begins thousands of job cuts

Oracle has set aggressive growth targets as the company transforms from a legacy software giant to an AI cloud provider. The company expects total revenue to grow to $225 billion in fiscal 2030, up from $57.4 billion in fiscal 2025. Oracle Cloud Infrastructure is projected to account for $166 billion of the top-line total for fiscal 2030. Earnings per share are expected to grow to $21 from about $6 in fiscal 2025.

However, the "vast majority" of hedge funds and long-only asset managers that Favuzza has spoken with are "not willing to underwrite" Oracle's fiscal 2030 revenue and earnings targets. Wall Street consensus estimates also fall a bit shy of Oracle's own projections. According to FactSet, 2030 revenue is expected to be $223.6 billion. Earnings per share are expected to be $20.53. According to Favuzza, buy-side earnings estimates are even lower, at just $16.

Cautious investors are skeptical of Oracle's pivot from a high-margin software business to a capital-intensive chip rental business with increased customer concentration, Favuzza added. The fear is that Oracle will continue to take on more debt to fund its operations, while facing the risk that its major customer, OpenAI, can't follow through on its compute commitments.

It will be difficult to turn sentiment around until investors get better visibility into Oracle's capital-expenditure plans for fiscal 2027 and 2028, Favuzza said.

Even as institutional investors remain on the sidelines, some Wall Street analysts maintain that Oracle is a top AI pick. In a note last month, Bernstein analyst Mark Moerdler wrote that he expects Oracle to become free-cash-flow positive by fiscal 2030 as the company completes its data-center build out with less capital than initially expected.

See more: Why Oracle's stock may be a 'go-to' AI winner that investors are overlooking

-Christine Ji

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04-08-26 1108ET