Morgan Stanley Maintains Equal-Weight Rating and $210 Price Target for Oracle
Oracle delivered strong Q1 fiscal 2027 results, with cloud infrastructure revenue growing by 121% year over year to reach $7.4 billion due in part to the AI boom. Total revenue hit $19.3 billion and remaining performance obligations (RPO) reached a record $664 billion. Despite these positive operational metrics, Oracle's stock has underperformed significantly this year, down 20.9% year-to-date and nearly 50% over the past twelve months. Morgan Stanley reviewed Oracle’s results in a note shared with TheStreet, maintaining its Equal-weight rating but keeping its $210 price target unchanged. While praising Oracle's execution on cloud infrastructure expansion and capacity delivery across multiple sites, Morgan Stanley highlighted concerns around gross margin compression due to heavy upfront investments in GPU infrastructure. The firm noted that non-GAAP gross margins fell by 770 basis points year over year to 61%, raising questions about when profitability will improve. Oracle guided for continued strong revenue growth and raised full-year fiscal 2027 revenue guidance, but the path toward margin improvement remains a key uncertainty.
Topics: AI Growth Cloud Infrastructure Earnings Report Morgan Stanley Oracle