Morgan Stanley Reiterates Equalweight Rating on Oracle

Morgan Stanley analyst Sanjit Singh reiterated an Equalweight rating and $207.00 price target on Oracle (NYSE: ORCL).

“On the back of a solid Q3, with shares moving 30%+ higher intra-quarter, a more mixed print to cap off FY26 underwhelmed relative to expectations – driving a negative reaction after hours.

While Cloud Infrastructure Revenues of ~$5.8B accelerated to 93% YoY growth, incremental deceleration in Cloud Applications drove total Cloud revenue towards the midpoint of the guided range at +46% YoY on a constant-currency basis, and just ~50bps of upside to consensus on total revenue.

More constructively, NGAAP gross margins of 66.3% improved sequentially (though still down 500bps YoY), while NGAAP operating margins of 44.8% upticked both sequentially and YoY (on account of intra-quarter efficiency actions) – driving a ~7% beat to consensus EPS.

Additionally, RPO of $638B increased $85B sequentially, and was up 363% YoY – with the majority of the increase tied to pre-payment / bring your own hardware deal structures.

Looking to FY27, Q2 Cloud revenue guidance came in 3% ahead of consensus (contemplating 61% YoY growth at the midpoint), while EPS came in 3.6% ahead of consensus (at the midpoint).

That said, FY27 total revenue guidance was reiterated at $90 billion, and FY27 EPS guidance of $8.05 remains largely unchanged relative to the $8.00 target provided during the October 2025 Analyst Day.

From here, as Oracle enters and advances through the peak of its GPUaaS investment cycle, investors remain focused on near-term execution before underwriting the ambitious multi-year targets the company is aspiring to.”

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