Oracle shares rose roughly 1% on Tuesday, recovering modestly after a difficult stretch that has erased the euphoria surrounding the company’s record-setting cloud backlog.
The stock has had a bruising few weeks, dropping 23.1% in November and wiping out the gains that followed its blockbuster September earnings report.
In September, Oracle shocked the market when it reported that its total backlog had more than quadrupled to an extraordinary $455 billion, driven largely by a reported $300 billion cloud computing deal with OpenAI.
The announcement triggered a surge in the stock as investors focused on the long-term revenue implications while downplaying early questions about the structure and durability of the Oracle–OpenAI partnership.
That optimism has since evaporated. As investors reassessed the risks, concerns grew around Oracle’s rising debt, the viability of OpenAI’s commitments and the stability of the broader artificial intelligence boom.
The stock’s sharp decline reflects those shifting market dynamics.
Analysts remain bullish on Oracle stock
Despite the pullback, several analysts have reiterated bullish calls on Oracle, arguing that the market is mispricing the company’s fundamental strength.
Deutsche Bank’s Brad Zelnick maintained a Buy rating with a $375 price target, telling investors last week that even the bear case looks bullish.
He pointed to strong earnings and revenue growth outside of the OpenAI contribution and described the massive AI-related backlog as a “solid ROI business” that validates Oracle’s leadership in large-scale AI cloud infrastructure.
“While we appreciate the financial and operational risks, our view is that these are much more than offset by the very real opportunity,” Zelnick wrote, adding that the stock’s recent slide presents an “attractive entry point.”
HSBC echoed that view earlier in the week, reaffirming a Buy rating and $382 price target.
The firm argued that investor confusion over Oracle’s more than $500 billion in remaining performance obligations has allowed speculation to overshadow the company’s long-term guidance.
Oracle expects a 30–40% non-GAAP gross margin on its AI infrastructure business by FY30, a figure HSBC said is consistent with the mix of lower-margin cloud and slower-growing software.
HSBC concluded that Oracle is “skilfully planning to meet these commitments.”
Debt, OpenAI dependence remain core concerns
Oracle has leaned heavily on debt funding — including a recent bond sale — to support its cloud capacity expansion.
Capital expenditures have risen sharply as the company races to meet AI-related demand.
A key concern among investors is Oracle’s reliance on OpenAI as a cornerstone customer.
With ChatGPT not yet profitable and OpenAI committed to more than $1 trillion in cloud spending across Microsoft, Oracle, Google and others, questions remain about how much of that spending will materialise and at what pace.
These lingering uncertainties, along with widespread scepticism about AI valuations after a turbulent November, continue to weigh on sentiment.
Modest rebound amid broader market recovery
Tuesday’s small uptick reflects a tentative recovery rather than a shift in conviction.
Oracle is benefitting from a broader rebound in technology names after a weak start to December, but the stock remains deeply below its September highs.
Still, with analysts highlighting strong fundamentals outside the OpenAI narrative and pointing to long-term margin targets, some investors may view the recent pullback as overdone.
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