Oracle Corp. (ORCL) is set to release its fiscal third-quarter earnings on Tuesday, March 10, after the market close.
Three months ago, the 49-year-old cloud and database software company was hit hard after it reported fiscal Q2 revenue that fell short of analyst expectations and offered little clarity on the pace at which heavy AI investments would translate into profits.
Oracle reported those results on Dec. 10. Shares sank 10.83% on Dec. 11 and slipped another 4.66% on Dec. 12.
Oracle has failed to surpass revenue estimates in eight of the past 10 quarters. Its stock has dropped more than 50% from its September peak.
Here’s what to watch in the upcoming results.
Oracle’s financials suggest growing concerns
Last quarter, Oracle posted adjusted earnings of $2.26 a share, above the $1.64 consensus estimate, while revenue came in at $16.06 billion, below analysts’ expectations of $16.21 billion.
The company’s software revenue slipped 3% to $5.88 billion, compared with the $6.06 billion analysts had expected.
For Q3, analysts are looking for earnings of $1.7 a share on revenue of $16.92 billion.
Oracle’s remaining performance obligations (RPO) soared 438% to $523 billion last quarter, topping the $501.8 billion average analyst estimate. RPO reflects future contracted revenue and is a strong indicator of growth momentum. Investors are worried about its conversion to actual revenue amid high spending.
Another major concern is Oracle’s cash position and debt-raising.
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Oracle has been making major moves in its AI infrastructure buildout. In September, the company raised $18 billion through a bond sale. The same month, it announced a $300 billion deal with OpenAI.
In February, Oracle announced plans to raise up to $50 billion in debt and equity to meet contracted demand from its cloud customers.
Bloomberg reported last week that Oracle plans to cut thousands of jobs amid a cash crunch tied to its massive AI data-center expansion.
Oracle’s free cash flow for the last quarter was negative $13 billion. Analyst’s consensus was negative $5.2 billion.
Wall Street expects Oracle’s heavy data center spending to push its cash flow negative in the coming years. The investments may not pay off until around 2030, according to Bloomberg data.
Analyst lowers Oracle stock target
Barclays lowered its price target on Oracle to $230 from $310 ahead of the company’s Q3 earnings, maintaining an overweight rating, Seeking Alpha reported.
“AI revenue should be a little better compared to consensus, as, in our view, more AI capacity became available in Q3,” said analysts led by Raimo Lenschow.
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However, Lenschow noted that gross margin and EPS “will have headwinds as upfront investments and lease expense timing for the additional huge capacity ramps in H2 CY26 will create negative timing effects.”
Barclays remains a bull for Oracle, calling the current negative sentiment “an opportunity for long-term investors.”
“Many of the market’s concerns are being addressed, customer concentration and financing requirements, which means that fundamentals should start to play a greater role again,” the analyst wrote.
Citi also lowered the firm’s stock price target for Oracle to $310 from $370, reiterating a buy rating before earnings.
Citi said in a note sent to TheStreet that it expects Oracle’s capital spending to ramp up further following the company’s recent debt and equity issuance, which “could ease the build out concerns.”
The firm estimates capital expenditures could exceed $50 billion in fiscal 2026 and 2027.
For Q3, Citi analysts expect Oracle’s results to come in above the midpoint of guidance. The firm remains optimistic about Oracle’s longer-term outlook.
“While shares have been under pressure on broader software + financing concerns, we still see Oracle on track to deliver one of the strongest revenue/EPS accelerations in tech as large AI contracts ramp in the years ahead,” the analysts wrote.
As of writing, Oracle stock trades at $150.14 a share.
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