Yuvraj Malik
4 min read
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TD Cowen cut its ORCL price target to $240 from $300 while maintaining a Buy rating.
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Oracle’s aggressive AI data-center expansion is raising concerns over rising capex, debt, free cash flow, and its ability to generate returns from its massive backlog.
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A New Mexico court stayed key permits for Oracle and OpenAI’s Project Jupiter, potentially delaying new cloud capacity and increasing costs.
Oracle Corp. shares fell 5.2% on Tuesday, its biggest single-day drop since mid-July, as investors weighed a fresh price-target cut from TD Cowen alongside a broader market selloff driven by renewed tensions between the U.S. and Iran.
Oracle closed at $141.32 and fell nearly 0.8% in overnight trading. The benchmark S&P 500 closed 0.7% lower on Tuesday while the Nasdaq shed 1.03% as the global bond selloff deepened and crude prices spiked amid fading hopes for a near-term solution to the U.S.-Israeli war with Iran.
TD Cowen lowered its price target on ORCL to $240 from $300 while maintaining a ‘Buy’ rating, with the research firm citing Oracle’s analyst day on Oct. 28 as the next major catalyst for the stock. The event is expected to focus heavily on the company’s cloud business, with Oracle likely to issue updated fiscal 2030 targets, TD Cowen said in an investor note.
The fresh target – which is 70% higher than ORCL’s last closing price – comes as the cloud company faces growing investor scrutiny over the enormous cost of its AI infrastructure expansion. Oracle has been spending aggressively to build out new data centers to meet demand from AI customers, pushing capital expenditures sharply higher and weighing on free cash flow.
Investor Concerns Around Oracle’s Business
To do that, Oracle has taken on substantial debt and long-term data-center commitments. The company’s $638 billion backlog provides significant visibility into future revenue, but investors have increasingly questioned how quickly those commitments can translate into cash flow and whether the returns will justify the scale of spending.
Another concern is customer concentration. A large portion of Oracle’s backlog is tied to major AI customers, including OpenAI, raising questions about the durability and economics of some of the company’s biggest infrastructure commitments.
Oracle Faces Data Center Holdup
The New Mexico Supreme Court last week stayed key permits for Project Jupiter, the massive AI data center project linked to Oracle and OpenAI, after environmental groups challenged its air-quality and water approvals. The move could delay parts of the project’s development.
