Oracle: Investors Fear CapEx, But They Might Be Missing The Upside
Oracle is rated a buy despite investor concerns over high capital expenditures, as strong revenue growth in cloud and AI infrastructure highlights potential upside. Third-quarter revenue rose 22% year-over-year to $17.2 billion, with cloud and AI segments showing significant momentum. While elevated CapEx has pressured free cash flow, the company retains flexibility to adjust spending if demand shifts. The stock offers an estimated 33% upside based on projected sales and EBITDA growth.
- ▪Oracle's Q3 revenue grew 22% year-over-year to $17.2 billion.
- ▪Cloud revenue increased 44% and AI infrastructure revenue surged 243% in the quarter.
- ▪High capital expenditures have led to negative free cash flow, but spending can be adjusted based on demand.
- ▪The stock has a price target of $250.22, suggesting approximately 33% upside.
- ▪Analyst rating was revised to buy from strong buy due to CapEx concerns and model adjustments.
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