Oracle Needs More Clarity in GPUaaS Margin Profile, Morgan Stanley Says
Oracle (ORCL) showed improved confidence in Q3 with execution and demand, but uncertainty persists around GPU as a Service business margin, Morgan Stanley said in a Thursday note.The report said Oracle shares have risen more than 20% over the past two weeks partly on continued strength in AI compute demand data points and improved sentiment on compute capex."Further improvement in investor sentiment on AI related hyperscaler/neocloud capex and customer concentration risk could yield further upside," the report said."However additional clarity in the gross margin profile of the GPUaaS business and financing path going forward (and a right-sizing of longer-term targets) would be needed to get more strategically positive on the shares," the note added.Morgan Stanley kept its equal weight rating while lowering its price target to $207 from $213 on balanced risk-reward profile.Price: $177.79, Change: $-9.71, Percent Change: -5.18%