💥Oracle Stock Slammed: Is This Just the Beginning?

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Hi Fellow Investors,

Oracle (NYSE: ORCL) has long been a tech heavyweight, but its latest stock move is raising serious concerns.

After an analyst downgrade to “sell,” shares plunged more than 5% in a single day.

The warning? Oracle’s AI-fueled cloud ambitions may not deliver the revenue investors are counting on.

With valuations stretched and expectations sky-high, some experts believe Oracle stock could tumble as much as 40% over the next year.

Key Points:

• A Rothschild & Redburn analyst issued a rare sell rating on Oracle stock.

• The $175 price target implies shares could fall 40% from current levels.

• Lofty AI growth assumptions may not justify Oracle’s $877 billion market cap.

Why Analysts Are Turning Bearish on Oracle

Oracle has enjoyed a strong rally on the back of excitement around its cloud and AI infrastructure business.

The company projects this division could one day generate $60 billion annually — more than its entire revenue today.

But analysts argue this “blue-sky scenario” is overly optimistic and unlikely to materialize at the scale investors expect.

Rothschild & Redburn’s Alex Haissl initiated coverage with a sell rating, suggesting the market is dramatically overestimating Oracle’s growth potential.

With the stock recently above $308, the $175 price target reflects a sharp potential decline ahead.

This downgrade underscores just how fragile Oracle’s valuation looks.

Is Oracle Stock Simply Too Expensive?

Even if Oracle achieves record-breaking earnings in 2030, its valuation remains a sticking point.

Analysts forecast it could earn $13 per share and generate $19 billion in annual free cash flow by then.

But today, Oracle trades at 22 times those potential profits and 44 times its projected free cash flow.

That’s an extremely high price to pay for results that are still uncertain and years away from materializing.

Investors are essentially being asked to buy into AI promises before knowing if the bets will truly pay off.

For many, that makes Oracle a risky proposition in a market already demanding perfection.

Strengths

• Oracle remains a global enterprise software leader, with entrenched customer relationships across mission-critical industries.

• The company is investing heavily in AI infrastructure, seeking to position itself as a key player in supporting OpenAI and other generative AI workloads.

• Its ability to generate consistent cash flow historically has given Oracle the firepower to fund growth initiatives and shareholder returns.

Weaknesses

• Valuation is stretched to unsustainable levels, with shares pricing in future profits and cash flow that may never materialize.

• Overreliance on a single narrative around AI cloud growth leaves Oracle vulnerable if those projections fall short.

• The recent analyst downgrade signals Wall Street skepticism, which could weigh on investor sentiment and share performance.

Potential

• If AI bets succeed, Oracle could unlock a new multibillion-dollar growth engine, fundamentally reshaping its business profile.

• Long-term earnings growth to $13 per share by 2030 would mark the highest profit levels in company history.

• Continued global demand for enterprise cloud and database solutions ensures Oracle stays relevant even as AI hype evolves.

Conclusion

Oracle’s AI ambitions have propelled its stock to new heights, but cracks are starting to show.

With Wall Street questioning whether its lofty projections are realistic, investors must weigh the risks of paying premium prices for uncertain growth.

For now, Oracle looks like a stock that may be better avoided until the valuation cools.

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