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Several Wall Street analysts’ lowered their price targets. Is Oracle stock a buy?

It was another rough day for the technology sector after Oracle (Nasdaq: ORCL), the cloud computing software and infrastructure provider, saw its stock price plummet on Tuesday.

The catalyst for Oracle’s 5% decline to $141 per share was its fiscal third quarter earnings report, released Monday after the market closed.

Oracle generated $14.13 billion in revenue in the quarter, up 6% year-over-year. However, it fell short of analysts’ estimates of $14.39 billion.

Also, the firm posted net income of $2.94 billion in the quarter, which was up 22% year-over-year. Earnings were $1.02 per share, while adjusted earnings were $1.47 per share – up 4%. This also missed estimates as analysts had anticipated adjusted earnings of $1.49 per share.

Oracle did raise its quarterly dividend by 25% to 50 cents per share, or $2 per share annually, at a yield of about 1.13%. It marks the 11th straight year that Oracle has increased its dividend.

Revenue outlook falls short of estimates

Oracle makes most of its revenue from its cloud services business. The cloud segment saw revenue increase 10% year-over-year to about $11 billion, or 78% of total revenue. This business has benefitted from the surging demand for AI computing power and cloud capacity.

“We have now signed cloud agreements with several world leading technology companies including: OpenAI, xAI, Meta, NVIDIA and AMD. We expect that our huge $130 billion sales backlog will help drive a 15% increase in Oracle’s overall revenue in our next fiscal year beginning this June,” Oracle CEO Safra Catz said.

Catz expects the backlog to grow even more after it signs its first Stargate contract. Stargate is a $500 billion joint venture with SoftBank and Open AI, among other tech partners, to build AI infrastructure.

However, for the fiscal fourth quarter, Oracle’s outlook fell short of estimates. Oracle anticipates revenue to increase 8% and 10%, but analysts were expecting 11% growth to $15.91 billion. Adjusted earnings are targeted at $1.61 to $1.65 per share, but analysts were anticipating $1.79 per share.

Several analysts lower their price targets

The Q3 earnings miss and tepid outlook caused a slew of analysts to lower Oracle’s price target.

RBC Capital analyst Rishi Jaluria dropped Oracle (ORCL) price target by $20 to $145 on the revenue and earnings miss. Also, Jaluria said that with continued capacity constraints, Oracle will likely struggle to see meaningful earnings acceleration, according to the Fly.

Cantor Fitzgerald lowered its price target for Oracle by $39 to $175 but it maintains its buy rating. Analysts said Oracle’s adjusted earnings were in line with estimates, but revenue and free cash flow were below expectations. The lower price target considers higher execution risks of higher capital expenditures, as well as supply constraints and dependency on training revenues, the Fly reported.

Several other analysts also lowered their targets, including UBS, Barclays, Morgan Stanley, Stifel, Piper Sandler, Evercore, and BofA — the latter of which called its 2026 targets “a stretch.”

But even with the lower price targets, Oracle is rated as a consensus buy, with a $205 per share target. That would be 40% higher than its current share price.

Oracle stock is down 15% YTD, and its P/E has dropped to 34. Its forward P/E is considerably lower at 21. Oracle may not have met some of its lofty price targets, but it remains well-positioned for growth and looks like a solid option.

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