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Oracle Corp ORCL stock traded lower on Wednesday as big-cap tech remains under pressure in a risk-off tape. The Nasdaq is down 0.59% while the S&P 500 has shed 0.16%.
The stock drew scrutiny on CNBC’s "Fast Money" on Tuesday after traders discussed reports that data center cost overruns are weighing on the stock and raising questions about its AI infrastructure strategy.
Cost Overruns Raise Doubts
Dan Nathan, principal of RiskReversal Advisors, said on Tuesday on “Fast Money” that Oracle lacks the cloud-buildout experience of Amazon.com Inc AMZN Amazon Web Services, Alphabet Inc GOOGL Google Cloud and Microsoft Corp MSFT Azure. He said the market appears skeptical that Oracle can meet some of its obligations, especially those tied to OpenAI, as the company faces negative cash flow, rising debt needs and unexpected project costs.
Credit Risk Draws Focus
American businesswoman and television personality Karen Finerman pointed to elevated credit default swap spreads as a sign of growing concern about Oracle’s leverage. She said Oracle may eventually struggle to issue more debt and could consider equity financing, which would add pressure to the stock.
Finerman also warned that another downgrade could make Oracle’s financing more expensive and difficult, especially if the company moves closer to junk-rated status before its next earnings report in September.
OpenAI Exposure Worries Traders
American trader, television personality, and professional investor Guy Adami said Oracle’s outlook depends heavily on OpenAI’s ability to meet its revenue forecasts. He said Oracle could face significant risks if OpenAI underperforms because Larry Ellison, Oracle’s chief technology officer, has heavily invested in that partnership.
During his “Fast Money” appearance, Adami added that credit default swap pricing suggests deeper concerns around Oracle than the stock’s decline alone reflects.
Technical Support Offers One Bright Spot
Steve Grasso, CEO of Grasso Global Inc, focused on Oracle’s chart setup. He said the stock is trading near a level that has acted as support over the past two to three years, though he stopped short of recommending investors buy it.
Technical Analysis
From a trend perspective, Oracle remains in a bearish structure: the stock is trading 7.6% below its 20-day SMA, 26.8% below its 50-day SMA, and 32.4% below its 200-day SMA. The 20-day SMA sitting below the 50-day SMA reinforces that recent price action is still tilted lower, and the death cross that formed in January keeps the longer-term trend filter negative.
Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $260.04. Recent analyst moves include:
- CLSA: Initiated with Hold (Target $145.00) (July 20)
- Bernstein: Outperform (Raises Target to $325.00) (June 11)
- RBC Capital: Sector Perform (Maintains Target $190.00) (June 11)
Top ETF Exposure
- iShares Expanded Tech-Software Sector ETF IGV: 5.87% Weight
- First Trust NASDAQ Technology Dividend Index Fund TDIV: 9.82% Weight
- Pacer Data and Digital Revolution ETF TRFK: 7.57% Weight
Significance: Because ORCL carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
ORCL Stock Price Activity: Oracle shares were down 0.44% at $126.50 at the time of publication on Wednesday, according to Benzinga Pro data.
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This article Oracle Faces Pressure: Data Center Costs and OpenAI Exposure Weigh on Stock originally appeared on Benzinga.com.
