-- 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%