As Analysts Lift Oracle Targets, a Governance Probe Raises Stakes for June 10 Earnings
05.06.2026 - 05:36:20 | boerse-global.de
Just days before Oracle reports its fourth-quarter fiscal 2026 results, the company finds itself caught in a peculiar tension. On one side, Wall Street analysts at UBS, Scotiabank, and Mizuho have rushed to raise price targets, betting on the cloud giant's AI momentum. On the other, a US law firm has launched an investigation into whether top executives violated their fiduciary duties — and a federal lawsuit accuses the company of downplaying the financial toll of its AI infrastructure buildout.
The probe, announced Thursday by Kuehn Law, does not allege wrongdoing but zeroes in on the questions that have dogged Oracle for months: the scale of capital expenditure, rising debt, credit risks, and the trajectory of free cash flow. The investigation follows a Reuters report from January that bondholders had sued Oracle for allegedly concealing the need for additional debt financing to fund its AI expansion. Management countered in March that most AI contracts are either pre-funded by customer payments or involve customer-supplied hardware, meaning no extra capital raising is necessary. That assertion will face its stiffest test when Oracle reports after the bell on Wednesday, June 10.
The cash flow picture gives investors reason to pause. Oracle currently posts negative levered free cash flow of $24.7 billion — a stark number for a company that is simultaneously laying off roughly 11,000 employees to save about $800 million a year. Scotiabank, which raised its price target to $290, predicts that Oracle's investment guidance for fiscal 2027 could approach $100 billion. Mizuho, the most bullish with a $320 target, expects free cash flow to turn positive only by fiscal 2029, reaching $4 billion, before jumping to $36 billion the following year. The gap between today's cash burn and tomorrow's promised returns is the central tension underpinning the stock.
Should investors sell immediately? Or is it worth buying Oracle?
The analyst community remains overwhelmingly bullish. Of 42 ratings tracked, 32 are Buy, nine are Hold, and just one is Sell. UBS lifted its target from $250 to $285, with analyst Karl Keirstead citing feedback from four large customers and a contractor working on the Abilene, Texas, data center expansion — seeing no slowdown in demand. Morgan Stanley, however, trimmed its target from $213 to $207 with an Equal-weight rating, reflecting caution about the scale of capital commitments. The average price target stands at $263.62.
Oracle's backlog provides a powerful narrative. Remaining performance obligations hit $553 billion in the third quarter, up 325% year-over-year, largely from massive AI contracts. Revenue rose 22% to $17.2 billion, with cloud infrastructure alone surging 84% to $4.9 billion. For the fourth quarter, consensus forecasts earnings of $1.96 per share on revenue of $19.1 billion — roughly 20% growth. Oracle itself guided for $1.96 to $2.00 per share and has beaten earnings estimates in each of the past four quarters. Mizuho argues the issue is not demand but execution: converting the enormous backlog into OCI revenue at a faster pace.
Yet the stock's technical picture reveals how much optimism is already baked in. On Thursday, shares closed at €203.55, giving a year-to-date gain of around 22% and a 12-month advance of 36%. The RSI sits in the 69.5–69.6 range, near overbought territory, with the price about 33% above its 50-day moving average. The stock suffered a nearly 6% drop on June 3 after Alphabet announced an $80 billion equity offering to fund its own AI investments — a reminder that even the strongest AI stories are vulnerable to sectorwide capital concerns. Options markets are pricing an implied move of roughly 12% following earnings, well above the average 7.33% swing seen around the past four quarterly reports.
All roads lead to Wednesday's conference call at 4 p.m. Chicago time. If Oracle can demonstrate that its AI backlog is converting into revenue without derailing financial discipline, the governance investigation may remain a footnote. But any weak details on capital expenditure, debt levels, or the path to positive free cash flow will test whether a stock that has nearly doubled from its 52-week low of €113.86 can sustain its lofty valuation.
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