Wolfe Research Reiterates Outperform Rating on Oracle

Wolfe Research analyst Alex Zukin reiterated an Outperform rating and $215.00 price target on Oracle (NYSE: ORCL).

“ORCL delivered a quarter that signaled an “all clear” to the fear uncertainty and doubt that was seemingly in the headlines all quarter.

ORCL outperformed guidance across all metrics for the first time this fiscal year with clearer commentary on strategy and confidence in demand supporting increased FY27 revenue guidance ($90B vs. $89B prior).

RPO grew $29B Q/Q (with “very strong” cRPO growth), which would have grown more if new bring-your-own-hardware deals (BYOH) were less of the mix.

ORCL communicated increasing financial flexibility and creativity with BYOH deals, leading to the ability to fill demand with a lighter balance sheet burden.

While CapEx of ~$19B (+$5B vs. our estimate) was materially ahead of expectations, this was impacted by timing, and will continue to be volatile based on scheduled builds, highlighted with reiterated FY26 CapEx guidance (~ $50B), embedding a $9B Q/Q decline that is not indicative of demand.

ORCL added 400MW capacity in 3Q (~800MW added in TTM), increasing visibility in FY27 growth, while AI gross profit margins from capacity delivered this quarter came in at 32%, in line with the 30-40% margin range communicated at A-day based on fully ramped deployment.

While positive in the quarter, it is not indicative as a starting gross margin base for broader AI business, with management reaffirming the previously stated range.

Importantly, ORCL remains confident in its financial flexibility and, despite strong demand, does not expect any incremental debt funding in calendar 2026, but noted that it has embedded estimated ATM facility utilization in guidance.”

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