Shares of Oracle (NYSE: ORCL) dropped 8.53% on June 11 after investors grew concerned about the company’s plans to raise additional capital to fund its artificial intelligence expansion.
The selloff came despite Oracle reporting stronger-than-expected fiscal fourth-quarter results the previous day, with adjusted earnings of $2.03 per share beating analyst estimates of $1.96 per share.
Revenue climbed 21% year over year to $19.18 billion, edging past the $19.10 billion analysts had anticipated, marking a solid quarter for the 49-year-old cloud and database software giant.
Oracle maintained its fiscal 2027 revenue guidance of $90 billion and raised its adjusted earnings per share forecast to $8.05, ahead of Wall Street’s expectation of $8.01 per share.
For the fiscal first quarter, Oracle projected adjusted earnings of $1.72 to $1.76 per share alongside revenue growth of 27% to 29%, compared to analyst expectations of $1.68 per share and roughly 28% revenue growth.
Wall Street remains cautious about Oracle’s heavy data center spending, with Bloomberg data suggesting the investments may not generate positive cash flow returns until around 2030.
Bank of America analyst Tal Liani reiterated a buy rating and $240 price target on Oracle stock, pointing to the company’s 93% year-over-year growth in cloud infrastructure and platform services as a key takeaway.
Liani also highlighted an $85 billion increase in remaining performance obligations, describing it as “reinforcing visibility into future revenue” and signaling durable long-term demand for Oracle’s infrastructure.
Bank of America’s $240 price target is based on 26.5 times its calendar year 2027 price-to-earnings estimates, revised upward from 22 times previously, reflecting broader software sector valuation expansion.
Approximately $50 billion in recent debt and equity raises have materially reduced funding concerns surrounding Oracle’s aggressive data center buildout, according to the Bank of America research note.
“We expect [roughly] 12% of RPO to convert into revenues over the next 12 months, on the back of data center buildout completion,” Liani wrote in the note sent to TheStreet.
Bank of America views the post-earnings selloff “as noise relative to the underlying infrastructure ramp” and expects Oracle’s revenue mix to continue shifting toward faster-growing segments over time.
