Oracle Corp (NYSE: ORCL) closed notably lower on Tuesday after a report from tech publication – The Information – raised concerns about the company’s cloud margins.
The aforementioned report suggested Oracle’s artificial intelligence (AI) infrastructure buildout – powered by Nvidia chips and new data centres – may be more capital-intensive than Wall Street’s initial expectations.
Investors responded negatively to The Information report since it signalled a potential drawdown in ORCL’s profitability.
While the company’s cloud backlog (RPO) came in up 529% last month, analysts have long questioned the visibility of returns and long-term margin trajectory.
Tuesday’s sell-off marks renewed scrutiny over Oracle’s transition from a high-margin software to a lower-margin cloud services firm.
However, the NYSE-listed giant has two big events scheduled for next week, which could address some of the concerns and push Oracle stock higher from here.
Oracle World could prove a tailwind for ORCL stock
“Oracle World” kicks off next week in Las Vegas – offering the company a high-profile opportunity to reset the narrative.
At the annual event, Safra Catz and Mike Sicilia, alongside Larry Ellison, are expected to showcase Oracle’s artificial intelligence ambitions, cloud infrastructure roadmap, and data centre expansion.
Investors will be watching closely for commentary on how ORCL plans to manage the rising costs of Nvidia chips, labour, and – most critically – power.
The question of where Oracle might source energy from for its sprawling data centre footprint has become central to the margin debate.
If executives can convincingly outline a scalable and cost-efficient infrastructure strategy, it could help restore confidence in the firm’s long-term profitability – and, by extension, in ORCL stock.
Ellison will likely lean into Oracle’s role as a major enabler of AI workloads, emphasising strategic partnerships and technical differentiation.
Oracle World could prove a bullish catalyst if the tech giant demonstrates operational discipline and a clear path to margin recovery.
Analyst Day could push Oracle shares to record levels
Following Oracle World, the company will host its Analyst Day on Thursday – a more financially focused forum where Wall Street’s toughest questions will be front and centre.
At the event, experts will likely press ORCL executives on the economics of its OpenAI deal, the timeline for margin improvement, and the ROI on its cloud investments.
Recent reports highlighted a 14% gross margin on $900 million in sales – far below 70% margins investors once associated with Oracle’s legacy software business.
This event offers ORCL a chance to recalibrate expectations and provide transparency around OCI profitability, backlog conversion, and capital allocation.
Again, if management can articulate a credible plan for margin expansion over the next six to twelve months at the Analyst Day, it could ease investor concerns and reignite bullish sentiment on Oracle shares.
But the Street sure will look for clarity at these events – not just vision.
Why Oracle’s dip may be a buying opportunity
Despite margin headwinds, Oracle stock remains one of the most compelling plays in enterprise AI infrastructure.
Its cloud backlog growth – up 500% plus – suggests robust demand, and the company’s strategic positioning alongside OpenAI and Nvidia gives it a seat at the table in the next wave of technology transformation.
The recent selloff may, therefore, reflect short-term noise rather than structural weakness.
ORCL’s pivot to cloud is in its early innings, and as data centre economics improve and AI workloads scale, margins could follow.
For long-term investors, the pullback offers a chance to buy into a legacy tech stock with renewed relevance and a multi-year growth runway.
Wall Street’s consensus “overweight” rating on Oracle shares also comes with a mean target of $337, indicating potential upside of nearly 20% from here.
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