"A key moment for AI stocks": what Wall Street is expecting from Oracle's report

US-based Oracle will report earnings for September-November 2025 after the stock market closes in New York on December 10. The quarterly report of the software developer, which is rapidly transforming into a provider of data centers for artificial intelligence, may lead to sharp fluctuations in quotations of the entire AI sector, which provided the rally of the US stock market.

According to the consensus forecast of analysts surveyed by FactSet, Oracle will report net income for the second quarter of fiscal 2026 will rise 11% to $3.5 billion, or $1.21 per share. Adjusted earnings per share excluding one-time factors should rise to $1.64 from $1.47 a year earlier. The company's revenue, according to analysts, will increase by 15% to $16.19 billion, MarketWatch writes.

However, a quarter ago, it wasn't profits and revenue that catalyzed Oracle's record jump in stock prices - after the publication of its first fiscal quarter report, the stock soared 30% in one session thanks to the company's unprecedented order book in cloud services, recalls IG analyst Fabienne Yip. Oracle is still "at a crossroads between extraordinary opportunity and significant risk," she said.

"Investors are likely to prioritize management comments over quarterly metrics, focusing on three critical questions. First, will Oracle be able to demonstrate that its sizable order book is being converted into actual revenue? Second, what specific steps does management intend to take to manage debt levels and capital expenditures while maintaining investment grade credit ratings? And third, is Oracle able to provide tangible evidence that cloud infrastructure growth is accelerating in line with forecasts and supported by real demand outside of its relationship with OpenAI?" wrote Yip on Dec. 9.

Oracle's report could be key to stock momentum in the artificial intelligence sector - quotes could swing either way, Barron's warns. If the report shows that bigtechs are slowing investment in data center expansion, the securities of chip makers and AI infrastructure providers could collapse and result in trillions of dollars in lost capitalization, the publication notes. If, however, Oracle's earnings and statements from its management confirm hopes for increased investment in AI, tech stocks should go up.

Investor confidence in Oracle has weakened markedly of late, with its stock down more than 45% from its mid-September high to its November low. The main concern centers around the company's changing financial structure: since the fourth quarter of fiscal 2025, Oracle's free cash flow has turned negative, with the company seeking to raise $38 billion in loans in addition to $105 billion in outstanding debt. In addition, Oracle's planned capex for FY 2026 of $35 billion is significantly higher than the company's usual investment levels, the IG analyst said.

Ratings agencies Moody's and S&P have warned that they may downgrade Oracle's credit rating to speculative if the company's debt grows faster than profit growth. Markets are also signaling increased caution: according to the Intercontinental Exchange (ICE) network of exchanges, the cost of insuring Oracle's debt against default, as measured by the price of its credit default swap, rose to its highest level since 2009 in early December, Yahoo Finance notes.

Traders are hedging against high volatility on Wall Street after the publication of Oracle's quarterly reports. Judging by options quotes, the market is laying the stock movement by 10% in any direction after the report release, follows from Bloomberg data.

Opinions of Wall Street analysts regarding Oracle's prospects are divided, which also indicates market uncertainty. According to LSEG data cited by IG, the majority of experts - 33 out of 46 - maintain their recommendations to buy Oracle shares, while 13 analysts have neutral or negative assessments. At the same time, the consensus forecast looks optimistic: the average target price of $337 per Oracle share implies a 55% growth potential for the company's securities.

This article was AI-translated and verified by a human editor