ORCL Stock Slides Premarket Ahead Of Q4 Print — But BofA Sees 20% Upside On Red-Hot AI Demand

Key earnings-call focus areas include Oracle's data-center buildout, AI-related revenue recognition, and capital spending needs.

• BofA cited accelerating AI and cloud demand, easing funding concerns after $50 billion in debt and equity raises.
• Wall Street expects Q4 revenue of $19.19 billion and adjusted EPS of $1.96, with both metrics rising from year-ago levels.
• Morningstar expects Oracle's revenue growth to average 30% annually over five years and OCI growth of 78% annually.

With Oracle Corp. set to report after the closing bell on Wednesday, Wall Street is looking for cues to one key question: can the software giant's AI-fueled data-center expansion justify a rally that has already surged over 40% since March?

ORCL stock slipped 2% in premarket trading on Wednesday after closing the previous session down 3% at $205.81. 

BofA Sees 20% Upside Ahead Of Q4 Print

Despite Oracle's recent rally, BofA Securities believes the stock has more room to run.  The brokerage raised its price target on ORCL to $240 from $200, implying a 20% upside from current levels, and maintained a 'Buy' rating. The bank said investor confidence has improved as Oracle addressed funding concerns through $50 billion in debt and equity raises, while demand for its AI and cloud offerings continues to accelerate.

For investors, Wednesday's earnings call is likely to be less about the quarter and more about Oracle's ability to monetize an unprecedented wave of AI demand. BofA identified three key areas to watch: the pace of Oracle's data-center buildout, the timing of revenue recognition from AI-related contracts, and the capex and financing needs required for expansion. The firm said demand trends remain "robust" across both Oracle Cloud Infrastructure (OCI) and its database business.

Analysts expect Oracle to report fiscal fourth-quarter revenue of $19.19 billion, representing 20% year-over-year growth, according to Koyfin consensus estimates. Adjusted earnings are expected to rise 15% to $1.96 per share. The report will also mark the first earnings call for newly appointed CFO Hilary Maxson, who took over in April.

Can Oracle Keep Up With AI Demand?

Morningstar said last week that Oracle's execution on its massive data-center buildout should help ease investor concerns, adding that OCI is now "squarely at the center of the booming AI ecosystem" through relationships with OpenAI, Meta and xAI. The firm said Oracle is "on track to become a leading infrastructure provider for AI training and inference workloads."

The research firm expects Oracle's revenue to grow at an average of 30% annually over the next five years, driven by cloud infrastructure and applications. It projects OCI revenue to expand at a 78% compound annual rate, with total cloud revenue increasing 10x over the next seven years. 

On the other hand, Morningstar cautioned that Oracle's AI growth story hinges on securing sufficient GPUs and bringing data-center capacity online quickly enough to meet demand. The firm also flagged Oracle's growing reliance on major AI customers such as OpenAI, which has booked over $300 billion of OCI capacity beginning in 2027.

How Do Retail Traders Feel About ORCL?

On Stocktwits, retail sentiment for ORCL was ‘bullish’ amid an 112% jump in 24-hour message volumes.

One user said, “If Oracle posts a double beat and raises guidance, don’t be surprised to see a gap-up open above $220 and a quick run back to $250+.”

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Another user warned, “They’ll bring this down pre-earnings to get them for cheap. Don’t be someone’s exit liquidity! This is going to 300. Don’t fight it.”

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ORCL stock has risen 17% over the past year.

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