Oracle shares rose for 3 consecutive trading sessions ahead of earnings, gaining 12.6% cumulatively. Positive reviews of OpenAI's new ChatGPT-6 Astra model and Morgan Stanley's higher price target have been cited as bullish factors.
Oracle is scheduled to report results for the first quarter of fiscal 2027 after Thursday's close, with the market watching the growth momentum of its cloud business and the monetization of its AI infrastructure investments. Ahead of the earnings announcement, the stock rose for 3 consecutive trading sessions, bringing its cumulative gain to 12.6%. Positive reviews of OpenAI's latest model, ChatGPT-6 Astra, and Morgan Stanley's increase of its price target to $210 have also provided support.
Despite these positive factors, Oracle's capital expenditures reached $55.7 billion in fiscal 2026, while free cash flow was -$23.7 billion. The increase in total debt and substantial financing obligations have been cited by bears as grounds for caution. In addition, the company's remaining performance obligations (RPO) have expanded significantly to $638 billion year on year, making the conversion of these obligations into revenue a key focus.
The market is also sensitive to the outlook for increased OPEC+ production and developments in the Middle East, against a backdrop of supply disruptions in the oil market. OPEC's August daily production fell by 900,000 barrels from the previous month, while Brent crude temporarily rose to around $100 per barrel. This could affect investment decisions regarding Oracle, as oil prices may serve as a leading indicator for the cost of capital and demand for cloud investments.
Investor views remain divided overall. Morgan Stanley maintains a $210 price target, while CLSA has indicated a lower target of $145. Retail investor sentiment has returned to bullish territory, but the actual conversion of obligations into revenue and improvements in cash flow after the earnings announcement will remain the focus going forward.
From the perspective of the Japanese market, 日本オラクル's fiscal year ending May 2026 saw revenue rise 8.2% year on year and cloud revenue grow 34.3%, both at solid levels. However, the impact of the US headquarters' large-scale capital investments is limited, and the Japanese subsidiary's capital expenditures remain modest.