Oracle Faces Questions Around Pace of AI Data Center Buildout, RBC Capital Markets Says

MT Newswires Live06-05 23:28

Oracle (ORCL) is expected to provide clarity on the pace of its data center buildout to show whether capacity is coming online fast enough to meet the demand pipeline it has been signaling, RBC Capital Markets said in a note Thursday.

Management has consistently pointed to supply, not demand, as the constraint for Oracle Cloud Infrastructure growth, the brokerage said, adding that it will be watching for any update on megawatt additions and new campus announcement, among others, when the company reports its fiscal Q4 financial results on June 10.

The brokerage said investors will also likely focus on AI infrastructure buildout financing following the roughly 18% job cuts in April to free up capital as well as on the Stargate restructuring.

Questions remain around Microsoft-backed (MSFT) OpenAI's competitive positioning and implications for Oracle as its primary infrastructure partner, RBC said. However, OpenAI's latest

model cycle is encouraging for its market positioning among large language model providers, according to the note.

RBC Capital Markets raised its price target on Oracle to $190 from $160, and maintained its sector perform rating.

Shares of Oracle were down 5.9% in Friday trading.

Price: 222.33, Change: -14.02, Percent Change: -5.93

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