Oracle Stock Down 5% on Analyst Warning of 40% Downside from Cloud Hype

Oracle stock has fallen over 5% after analysts raised concerns about the company's ambitious cloud projections. Rothschild & Redburn analyst Alex Haissl initiated coverage with a Sell rating and set a $175 price target, implying a 40% downside from current levels. Haissl believes the market is overestimating Oracle's ability to expand its cloud business, particularly in artificial intelligence infrastructure. The analyst views Oracle's valuation as stretched and warns against banking on its $60 billion cloud revenue target.

Oracle Corporation (NYSE: ORCL) saw its stock fall by over 5% on September 12, 2025, following a sell rating from Rothschild & Co's Redburn analyst Alex Haissl. Haissl initiated coverage on the enterprise software and cloud services provider with a "Sell" rating and a $175 price target, implying a 40% downside from its current value. The analyst believes the market is overestimating Oracle's ability to expand its cloud business, particularly in artificial intelligence infrastructure.

Haissl's report highlights the contrast between Oracle's strategic commitments and the traditional long-term cloud contracts of the big three cloud service providers—Amazon (AWS), Microsoft (MSFT), and Google (GOOG)(GOOGL). According to Haissl, while Oracle's large-scale strategic commitments differ from these traditional contracts, the valuation dilution is far less material for hyperscalers like AWS, Azure, and GCP. The analyst argues that Oracle's business model lacks operating leverage, with the value accruing more to OpenAI than to Oracle.

The sell rating comes amidst Oracle's robust earnings and stock performance in 2025. The company's stock has nearly doubled this year, hitting an all-time high of $328 on September 10, 2025. However, the stock has since pulled back, trading around $291 as of September 12, 2025. The recent pullback is attributed to a mix of factors, including the analyst's bearish call and broader market weakness in tech stocks.

Oracle's Q1 FY2026 earnings revealed a 359% jump in remaining performance obligations (RPO) to $455 billion, driven by multi-billion-dollar cloud deals, including a $300 billion contract with OpenAI over five years. Despite the earnings beat, the stock has seen a modest pullback, with analysts split on Oracle's outlook. While most analysts remain bullish, Redburn's sell rating and $175 price target have contributed to the recent downward pressure on the stock.

Oracle's cloud business has been a significant driver of its growth, with cloud sales up 28% in Q1 FY2026. The company has also been active in the AI space, winning large AI workloads and signing partnerships like the one with OpenAI. However, the analyst's concerns highlight the risks associated with Oracle's ambitious cloud projections and the potential for valuation dilution.

References

Oracle initiated at Sell rating due to market's overestimation: Rothschild^[1] https://seekingalpha.com/news/4499061-oracle-initiated-at-sell-rating-due-to-markets-overestimation-rothschild
Oracle’s $300 Billion AI Cloud Bombshell Sends ORCL Stock Soaring – What’s Next?^[2] https://ts2.tech/en/oracles-300-billion-ai-cloud-bombshell-sends-orcl-stock-soaring-whats-next/