Analyst After Oracle (ORCL) Margin Report: There Are 'Cracks' In Belief That This Will 'Keep Going'

We recently published 10 Most Popular Analyst Calls to Watch This Week. Oracle Corporation (NYSE:ORCL) is one of the trending stocks.

Karen Finerman, CEO & Co-founder, Metropolitan Capital Advisors, recently discussed Oracle Corporation (NYSE:ORCL) stock decline following a report that said the company’s AI Cloud business margins are thin. The analyst said she sees “cracks” in the ongoing run based on AI deals and has been decreasing her exposure:

“But I mean remember when that sort of stunning RPO report came out, right, of this giant giant backlog. There was at the time discussion of, I mean basically it was some wholesale business, right? So that was a kind of much lower margin business that would be low single digits. So I mean that’s not new that some of this there would be a margin hit here. I think it’s more the idea of the market is getting concerned about, you know, we see tons of just giant deals to your point. How will they happen? When will they happen? Will they ever reach the promise of these very, very huge headline numbers? And so they’re sort of wondering, all right, well, let’s see how it actually plays out. We haven’t really seen that yet. We do see Nvidia’s numbers because that’s revenue now, but we don’t see yet, they’ve talked about three to four trillion dollars over the next few years. We haven’t seen that yet. There just seems to be, I think, cracks in the belief that this is going to keep going gangbusters and ultimately it’s all going to be worth it. It’s not all going to be worth it to everyone who’s involved. So, I’ve actually been paring back somewhat on anything that has exposure.”

Why are some analysts reluctant about the Oracle-OpenAI deal? OpenAI is expected to burn about $115 billion over the next four years and is not projected to be profitable until 2030. Even after Nvidia’s latest $100 billion investment by Nvidia,  OpenAI will likely need to raise over $200 billion in total funding to cover its commitments. Some analysts believe Oracle may need to borrow tens of billions to build enough data centers for the deal.

ClearBridge Large Cap Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its third quarter 2025 investor letter:

“During the quarter, the Strategy initiated new positions in infrastructure software providers Oracle Corporation (NYSE:ORCL) and Datadog and added to custom silicon developer Broadcom. Oracle, a leading provider of database software for large enterprises, has successfully expanded into cloud infrastructure as a platform to run generative AI workloads. Oracle is gaining share among hyperscalers due to its lower-cost data center architecture, which is well-suited for large scale AI training workloads. We believe Oracle’s share of the market will continue to grow over the next few years with profitability of this growth underappreciated by the market.”

While we acknowledge the potential of ORCL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.