Oracle Slips as Morgan Stanley Slashes Price Target to $213

Edgen Stock·Jan 24 2026, 01:23

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Key Takeaways

Morgan Stanley has significantly lowered its financial outlook for Oracle, warning that the company's aggressive artificial intelligence strategy could strain its balance sheet and delay profitability. The bank's analysis points to massive capital spending on data centers and slower-than-expected monetization of its GPU capacity, creating significant near-term risk for investors.

Price Target Cut: Morgan Stanley reduced its price target on Oracle stock by 33% to $213 from $320, while reaffirming its "Equal weight" rating.
Capital Expenditure Concerns: The bank projects Oracle will require $275 billion in cumulative capital expenditures from fiscal 2026 to 2028, far exceeding the consensus estimate of $189 billion.
Earnings Downgrade: The analysis forecasts Oracle's earnings per share at $8.51 for fiscal 2028 and $10.02 for 2030, both falling well below the company's long-term targets.

Morgan Stanley Cuts Oracle Target 33% to $213

Oracle's stock faced pressure on Friday, January 23, 2026, after Morgan Stanley issued a warning over the costs associated with the company's artificial intelligence ambitions. Analyst Keith Weiss slashed the firm's price target on Oracle to $213 from $320, a 33% reduction, citing concerns that its 'GPU as a service' strategy leaves little room for error. The bank reaffirmed its "Equal weight" rating on the stock.

In a note to clients, Weiss cautioned that while the large-scale data center buildout presents a sizable revenue opportunity, the path to profitability is fraught with risk. The report highlights the potential for rising capital requirements and slower monetization of its GPU capacity to push earnings below Oracle's own long-term goals.

Projected Capex Inflates to $275B, Straining Profits

The core of Morgan Stanley's bearish revision rests on escalating spending projections. The bank's model forecasts a cumulative $275 billion in capital expenditures for Oracle from fiscal 2026 to 2028. This figure stands in stark contrast to consensus estimates of $189 billion, signaling a much more capital-intensive path than the market currently expects.

This aggressive investment cycle is projected to weigh heavily on Oracle's financial health. The analysis forecasts that the company's gross adjusted debt will climb to exceed $400 billion by 2028. Consequently, Morgan Stanley revised its earnings per share (EPS) estimates down to $8.51 for fiscal 2028 and $10.02 for fiscal 2030. These figures suggest that even with massive AI investment, profitability may lag investor expectations and the company's own guidance, testing investor patience in the near term.