Oracle heads into its fourth-quarter earnings on June 10 with a paradox: a record backlog of cloud contracts that should fuel years of growth, but a stock that just suffered a sharp pullback amid broader weakness in AI-related names. The software giant’s shares fell 5.41% to €192.78 on Friday, erasing some of the previous week’s gains, even as several Wall Street banks raised their price targets. The selloff came just five days before the company reports, underscoring the tension between long-term promise and near-term execution risk.
The core question for investors is no longer about demand — that much is clear from Oracle’s “remaining performance obligation” (RPO), which stood at roughly $550–553 billion at the end of the third quarter. The challenge is whether the company can build data center capacity fast enough to convert that mountainous backlog into revenue. With big-ticket customers like OpenAI increasingly signing direct lease agreements through the Stargate project, Oracle is locking in utilization but also tying up enormous capital and planning resources.
Analyst targets reflect that optimism, albeit with caveats. Cantor Fitzgerald lifted its price objective to $284 from $229, citing positive partner checks and broad demand across database and application segments. Deutsche Bank kept its $300 target, pointing to the accelerated cloud infrastructure buildout and the massive order book. BTIG and Guggenheim have even bolder $400 targets, though those are long-term views that frame the current gap to the 52-week high of €280.70 as a potential buying opportunity. RBC Capital raised its target to $190 but stuck with a “Sector Perform” rating, arguing the recent move has been driven largely by multiple expansion rather than a fundamental shift in the business.
To sharpen its focus on AI data centers, Oracle has cut roughly 30,000 jobs, or 18% of its workforce, while ramping up capital spending. Guggenheim forecasts capex of around $75 billion for fiscal 2027 and $85 billion for fiscal 2028. That massive outlay is expected to push free cash flow to a trough in 2027 before the investments start generating meaningful returns. In the third quarter, revenue came in at $17.19 billion with earnings per share of $1.79. Management guided for Q4 EPS between $1.96 and $2.00.
Should investors sell immediately? Or is it worth buying Oracle?
On the operational side, Oracle is trying to bridge the gap between public cloud and on-premise requirements with its Private Cloud Appliance X10. The system brings Oracle Cloud Infrastructure’s compute, storage, and networking capabilities into customers’ own data centers, targeting companies that need cloud functionality but cannot move sensitive workloads to a public environment. The appliance integrates with existing products like Exadata and Database Appliance, making it a natural upsell for the installed base. This strategy helps Oracle embed its platform deeper into enterprise IT landscapes, even as it pours money into its own hyperscale facilities.
Technically, the stock’s momentum has cooled after a hot run. At Thursday’s close of €203.80, the shares had gained 23.40% over the prior 30 days and 22.04% year to date. The relative strength index stood at 69.5, suggesting a slightly overbought condition before Friday’s drop pulled the RSI back to 61.1 — a neutral reading. The stock still trades about 25% above its 50-day moving average of €154.38, though the gap to the all-time high of €280.70 remains 27.40%, indicating the market has yet to return to peak euphoria.
On June 10, the focus will be on the interplay between RPO growth, capex trajectory, and cash flow. If Oracle can show that its infrastructure spending is beginning to translate into faster revenue acceleration, the recent rally may have solid footing. But without evidence that the buildout is on pace, the sheer scale of investment could weigh on the shares. The market is betting on delivery — now Oracle must show it can build as fast as it sells.
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