By Angela Palumbo
Oracle stock will feel some pressure as the cost to build out artificial intelligence infrastructure continues to rise, this Morgan Stanley analyst says.
Keith Weiss rates Oracle as Equal-Weight and cut his price target on the stock to $213 from $320 on Friday. This new price target implies a 20% increase from the stock's last closing price of $178.18, as opposed to an 80% increase from that closing price when the price target was $320.
Oracle said when reporting second-quarter financials in December that it had grown its backlog of contracted customer commitments and ended its most recent quarter with remaining performance obligations of $523.3 billion, which was up 433% from the prior year. Weiss wrote in a research note that while this is a positive for Oracle and gives the company "visibility," it also will lead to higher costs as the company needs to build more compute power.
"It is important to note the development of this infrastructure carries significant capital intensity," Weiss wrote.
He believes Oracle plans to build out 10 or more gigawatts of AI compute capacity through fiscal 2030, which he expects will require hundreds of billions of dollars in additional spending.
"All together, we assess consensus is meaningfully underestimating Oracle's investment needs to deliver on this backlog, and in turn, also meaningfully underestimating the potential burden financing costs (via incremental debt issuance and assumption of lease obligations) could have on the flow through of this revenue to non-GAAP EPS," Weiss wrote.
Other analysts are more optimistic, though. Guggenheim's John DiFucci rates Oracle as a Buy with a $400 price target, and names the stock as a best idea for 2026.
DiFucci wrote in a note on Jan. 20 that while he recognizes that Oracle's costs will rise as the company works to build out AI infrastructure, the stock "could work over the next decade."
"We believe that it simply has a better mousetrap in Cloud Infrastructure built on lessons learned by others that came before it (primarily AWS), coupled with unique enterprise grade technologies that enable scaling and security like no others can today," DiFucci wrote.
Shares of Oracle were up 0.3% to $178.78 on Friday. The stock has risen 13% over the last 12 months.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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January 23, 2026 13:09 ET (18:09 GMT)
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