Melius Downgrades Oracle (ORCL) to Hold as AI Monetization Faces Scrutiny

Oracle Corporation (NYSE:ORCL) is one of the 10 AI Stocks Analysts Are Watching. On February 9, Melius analyst Ben Reitzes downgraded the stock from Buy to Hold while maintaining a price target of $160. The firm is cautious on ORCL, flagging its weak cash generation and AI monetization uncertainty.

The firm said that while it admired Larry Ellison’s bold push, it has also cautioned that the road ahead may be difficult. This is because high debt and potential equity raises may weigh on the stock for some time.

Melius particularly noted that the company’s enterprise value to free cash flow ratio is “NA” and suggesting that “value may be absorbed by debt and new stock issuances for a while.”

Reitzes added that Oracle should be valued “more akin to an infrastructure company vs. a software company.”

Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.

While we acknowledge the potential of ORCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, 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.