Rothschild Redburn Initiates Oracle Stock with Sell Rating, Citing Overvalued Cloud Revenue

Rothschild Redburn initiated coverage on Oracle with a Sell rating and a price target of $175.00 on Thursday.

The research firm stated that the market "materially overestimates the value of Oracle’s contracted cloud revenues," suggesting investors are pricing in optimistic scenarios that may not materialize. This concern aligns with Oracle’s current market capitalization of $876.56 billion and revenue of $59.02 billion.

Rothschild Redburn characterized Oracle’s role in single-tenant, large-scale deployments as "closer to that of a financier than a cloud provider," with economics that differ significantly from what investors typically value in cloud companies.

The firm’s analysis indicates Oracle’s five-year Oracle Cloud Infrastructure (OCI) revenue guidance represents approximately $60 billion in value, suggesting the market is already pricing in what they describe as a "risky blue-sky scenario."

Rothschild Redburn also noted "subdued non-IaaS growth" as a concern, predicting market attention will eventually shift from headline figures toward underlying economics, creating "meaningful downside risk" for the stock.

Oracle shares sank 5.6% on Thursday. The shares rose 1% in extended trading. US President Donald Trump late Thursday signed an executive order backing a plan to allow TikTok to remain in the U.S. through a sale to new investors. Oracle is "playing a very big part," Trump said at a White House news conference. Oracle stock fell Thursday.

In other recent news, Oracle Corporation’s credit ratings have been affirmed by major rating agencies as the company continues to expand its artificial intelligence infrastructure. S&P Global Ratings maintained Oracle’s ’BBB’ rating but noted a negative outlook due to concerns over increased debt levels and negative free cash flow. The company has raised its fiscal 2026 capital expenditure guidance to $35 billion, with expectations that spending could reach $38 billion in fiscal 2026 and possibly exceed $60 billion by fiscal 2028. Additionally, Oracle is reportedly planning a $15 billion bond offering, potentially including a rare 40-year bond, according to Bloomberg News.