Oracle Stock Moves Higher As Analyst Trims Price Target

Oracle's stock (NYSE:ORCL) is demonstrating strength in the pre-market, rising 2.14% to $199.90 despite a price target reduction from RBC Capital. The stock movements highlight the complex interplay between analyst sentiment and broader market expectations for Oracle's role in the burgeoning AI landscape.

The pre-market gains come even as RBC Capital analyst Rishi Jaluria lowered the firm's price target on Oracle to $195 from $250, maintaining a Sector Perform rating. Jaluria's note suggests that 2026 will be a pivotal year, where the benefits of AI adoption become increasingly apparent for well-positioned companies like Oracle. It is felt that those less prepared may struggle amidst the narrative of AI rendering traditional software obsolete. The analyst also sees enterprise spending stabilizing, with Generative AI acting as a catalyst for innovation, despite conservative guidance from management teams for early 2026.

Analyst actions surrounding Oracle have been mixed in recent months. Barclays reduced its price target from $400 to $330, while maintaining an Overweight rating, indicating concerns about capital efficiency and the rate at which backlog translates into revenue. Similarly, Piper Sandler lowered its price target to $190 from $210, though they maintained an Overweight rating, influenced by an increased Remaining Performance Obligation (RPO) backlog and revised capital expenditure plans.

However, not all analysts are bearish. Jefferies increased its price target to $360 from $270, citing substantial growth in RPO, which surged 359% year-over-year to $455 billion in the fiscal first quarter. Global Equities Research also raised its price target to $400 from $250, pointing to Oracle's advancements in Context Engineering as a significant AI driver.

Oracle's fiscal second-quarter 2026 results revealed a 14% year-over-year growth in total revenue, with cloud revenue accelerating by 34%, fueled by a 66% constant currency growth in Oracle Cloud Infrastructure (OCI). The company's substantial investments in AI infrastructure, including a reported $300 billion deal with OpenAI, have contributed to a significant increase in RPO, suggesting strong future revenue streams. This investment, however, has also led to higher capital expenditures and negative free cash flow, raising concerns among some analysts regarding capital efficiency.

Price Targets

Markets are closely watching Oracle's ability to convert its substantial RPO into realized revenue and effectively manage capital expenditures. The company's continued investments in AI and cloud infrastructure are viewed as critical for its long-term growth trajectory, but the immediate impact on profitability remains a key consideration for markets.