The Oracle stock price target is suddenly back in focus after one major Wall Street analyst slashed expectations by more than 30%. Oracle Corporation (NYSE:ORCL), long known for its dominance in enterprise databases, has reinvented itself as a cloud and artificial intelligence (AI) infrastructure player. That transformation fueled a powerful rally in 2025—but it also set the stage for a sharp reassessment of how much growth is already priced into the stock.

Oracle’s pivot toward cloud infrastructure placed it at the center of the AI boom, drawing heavy demand from customers that need massive compute capacity. Investors initially rewarded that momentum enthusiastically. However, as capital spending surged and balance-sheet risks mounted, skepticism began to creep in.

A Once-Red-Hot Rally Loses Steam

Oracle stock climbed relentlessly through the first nine months of 2025, peaking in mid-September as optimism around AI-driven cloud growth reached a fever pitch. The stock hit a high of $345.72 on Sept. 10, following a blockbuster earnings report that sent shares soaring nearly 36% in a single session.

Since then, the tone has changed dramatically. From its peak, Oracle stock has fallen roughly 47.2%, erasing nearly half of its prior gains. Over the past 52 weeks, shares are down 0.63%, while the last three months alone delivered a steep 35.6% decline. This reversal reflects a broader shift in investor sentiment as the market weighs long-term opportunity against near-term financial strain.

Why Morgan Stanley Cut Its Target

The catalyst behind the latest debate over the Oracle stock price target came from Morgan Stanley (NYSE:MS). Analyst Keith Weiss cut his price target on Oracle to $213 from $320—a sharp 33% reduction—while maintaining an “Equal-weight” rating.

The reasoning was not a dismissal of Oracle’s scale or growth potential. Instead, Weiss focused on the cost of sustaining that growth. Oracle’s backlog provides rare long-term revenue visibility, but fulfilling those contracts requires enormous infrastructure investment. Morgan Stanley argues that capital expenditures will rise far above current market expectations, weighing on earnings and increasing balance-sheet risk.

Heavy Spending and Rising Debt

Those concerns are rooted in hard numbers. Oracle has already raised $18 billion in debt to fund new data center construction, pushing total debt above $100 billion. The company has also committed to the Stargate project alongside OpenAI and SoftBank Group (OTC:SFTBY), a massive $500 billion initiative to build AI infrastructure across the United States.

Management now expects capital expenditures to reach roughly $50 billion in fiscal 2026, up $15 billion from prior guidance. In the most recent quarter, CapEx surged to about $12 billion, driving free cash flow to a negative $10 billion. Unlike some peers that rely more heavily on internal cash generation, Oracle is leaning on borrowing—raising concerns about leverage and credit risk.

Earnings Strength, Margin Concerns

Oracle’s fiscal second-quarter 2026 results, released on Dec. 10, showcased both the promise and the cost of its transformation. Revenue climbed 14% year over year to $16.1 billion, while cloud revenue surged 34% to $8 billion. Cloud infrastructure was the standout, with revenue jumping 68%, offsetting a modest decline in legacy software sales.

Non-GAAP EPS rose an impressive 54% year over year to $2.26, beating expectations. Oracle’s remaining performance obligations (RPO) ballooned to $523 billion, up 438% year over year, underscoring massive future demand. Still, the market focused on slightly weaker-than-expected revenue and the implications of soaring capital intensity. Shares dropped nearly 11% the day after earnings.

Valuation and Balance-Sheet Risks

At roughly 24.1 times forward non-GAAP earnings, Oracle is not cheap by historical standards. Its forward price-to-sales ratio of about 7.6x also sits well above traditional enterprise software peers. Investors are clearly paying a premium for AI-driven growth and long-term visibility.

However, leverage complicates the picture. With a debt-to-equity ratio above three and interest coverage below five, Oracle has less margin for error if growth slows. Credit default swap prices on Oracle’s debt recently spiked to levels last seen during the 2008 financial crisis, highlighting rising concern among credit markets.

Analyst Outlook Remains Divided

Despite Morgan Stanley’s caution, Wall Street is not uniformly bearish. Analysts expect Oracle’s fiscal 2026 EPS to grow 35.7% year over year to $5.97, followed by a more modest increase to $6.33 in fiscal 2027. Management has also guided for cloud revenue growth of 37% to 41% in the near term.

Overall, the consensus rating on Oracle stock remains a “Moderate Buy.” Of the 41 analysts covering the stock, 29 rate it a “Strong Buy,” one recommends a “Moderate Buy,” 10 suggest “Hold,” and one carries a “Strong Sell.” The consensus price target of $304.03 implies significant upside, while the Street-high target of $400 reflects continued faith in Oracle’s AI ambitions.

Bottom Line on Oracle Stock

The debate around the Oracle stock price target highlights a classic market tension: extraordinary opportunity versus extraordinary cost. Oracle’s backlog and cloud momentum are undeniable, but the capital required to deliver on those promises is testing investor patience. For long-term believers, the pullback may represent opportunity. For skeptics, rising debt and margin pressure justify caution. Either way, Oracle’s next chapter will hinge on whether AI-driven growth can outpace the weight of its own ambition.