Shares of Oracle fell on Friday after reports that the company canceled a large hardware order, even as analysts maintained a bullish outlook on its long-term position in artificial intelligence infrastructure.
The stock declined about 3.4% following reports that Oracle scrapped an order for 300 to 400 Nvidia GB300 NVL72 racks from Super Micro Computer, a deal estimated by market sources to be worth between $1.1 billion and $1.4 billion.
Order cancellation raises near-term concerns
The reported cancellation comes at a time when Oracle is aggressively expanding its cloud infrastructure to support surging demand for AI workloads.
While the move raised questions about near-term spending plans, the company’s latest financial disclosures continue to point to strong underlying demand.
In its fiscal third-quarter 2026 results, Oracle reported remaining performance obligations of $553 billion, up 325% from a year earlier.
The company also posted an 84% increase in cloud infrastructure revenue, which rose to $4.9 billion.
Oracle has indicated that demand for its cloud services is exceeding available capacity in certain areas, underscoring the scale of investment required to support customers.
AI ambitions drive investment strategy
Oracle has outlined plans to raise between $45 billion and $50 billion in 2026 to expand its cloud infrastructure footprint.
The company is targeting major customers, including OpenAI, Nvidia, xAI, and Meta, as part of its push to become a key provider of AI computing capacity.
The strategy has drawn mixed reactions from investors, with some expressing concerns about the scale of capital expenditures and the impact on free cash flow.
Shares have declined nearly 10% so far in 2026, reflecting these concerns despite a 28% gain over the past year.
However, Dan Ives, Wedbush Securities analyst argue that the market may be underestimating the strength of Oracle’s positioning.
“We believe Oracle is on a path to become a foundational infrastructure provider for the AI Revolution, and the market is fundamentally misinterpreting the company’s aggressive, contract-backed investment cycle as speculative risk,” said Ives in a note to clients.
He added that Oracle is in “the early innings of a significant repositioning.”
Analysts highlight long-term upside
Wedbush initiated coverage of Oracle with an outperform rating and set a $225 price target, implying a potential upside of about 27.6% from recent levels.
Ives pointed to several high-profile partnerships as evidence of Oracle’s progress.
In 2025, the company agreed to supply $300 billion worth of computing power to OpenAI over five years starting in 2027.
It has also partnered with Nvidia to integrate Oracle Cloud Infrastructure with Nvidia’s full-stack AI computing platform.
Despite concerns over spending, Ives dismissed the bearish case centered on capital intensity.
“The downside case against Oracle centers on its capital expenditures and negative free cash flow,” he said. “However, we argue this view is backward-looking and fails to appreciate the scale of contracted demand underpinning the investment.”
He also highlighted Oracle’s funding strategy, noting that the company has already raised $30 billion through a mix of investment-grade bonds and mandatory convertible preferred stock.
“Oracle is executing its $45-$50 billion capital raise, and ORCL has raised $30 billion already through a combination of investment grade bonds and mandatory convertible preferred stock, which is a strategic move to fortify its balance sheet and secure the resources needed to meet its contractual obligations,” Ives said.
According to LSEG data, 35 of the 46 analysts covering Oracle currently rate the stock as a buy or strong buy.
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