Oracle Drops 11% Post-Earnings; 3 Analysts Urge Buying
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- Oracle's shares dropped 11% to $179.49 in midmorning trading after its late-Wednesday earnings report, marking the company's largest single-session percentage decrease since January 2025.
- Guggenheim's John DiFucci called the drop 'for no apparently good reason' and held a Buy rating with a $400 price target, calling Oracle his 'Best Idea' and urging investors to 'aggressively buy the shares here.'
- D.A. Davidson's Gil Luria raised his price target to $225 from $200, noting Oracle's adjusted operating margin improved to 44.8% from 44.2% even as it accelerated cloud growth, with F1Q27 delivery expected to approach 1 gigawatt—nearly the capacity delivered in the prior four quarters combined.
- Oracle's Remaining Performance Obligations surged by $85 billion in the fourth quarter to $638 billion, a figure William Blair's Sebastien Naji called evidence of 'a compelling multiyear growth trajectory' alongside improving customer diversification.
- Oracle's gross margin has compressed from 77% in 2021 to 63% last year, per a related Barron's analysis—a structural margin concern the three bullish analysts largely dismiss in favor of long-term AI infrastructure positioning.
Why it matters: Oracle's $85 billion RPO surge and gigawatt-scale delivery pipeline signal locked-in multi-year AI infrastructure demand, but the 11% selloff reflects a real tension between near-term capex intensity and deferred free-cash-flow payoff expected from fiscal 2029 onward. For investors, the trade-off is a discounted entry to DiFucci's $400 target against the risk that the 77%-to-63% gross-margin compression flagged in Barron's own follow-up analysis proves permanent.
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