Oracle Corporation (ORCL.US) Pre-performance Barclays reaffirms "Hold" rating: AI revenue may slightly exceed expectations, but gross margin and EPS may face pressure.

Oracle Corporation (ORCL.US) will announce its performance for the third quarter of fiscal year 2026 after the US stock market closes on March 10th (Tuesday). The market currently generally expects Oracle Corporation's Q3 revenue to increase by 19.5% year-on-year to $16.91 billion, with adjusted earnings per share of $1.69. In the past 10 quarters of financial reports, Oracle Corporation has failed to exceed revenue expectations 8 times. Barclays maintains its "overweight" rating on Oracle Corporation ahead of the release of the latest financial report, but has lowered its target price from $310 to $230, a 26% decrease. Barclays analyst Raimo Lenschow stated in an investor report on Monday, "We believe AI revenue may slightly outperform market expectations as we see more AI capacity coming online in the third quarter." "In addition, the exchange rates are more favorable than the company's previous guidance, which should help overall revenue reporting. However, due to the negative timing effects of early investments in capacity expansion in the second half of 2026 and leasing expenses, gross margin and earnings per share will face pressure. In other words, the longs (including us) will focus on the company's continued strengthening growth momentum, while the shorts can at least question the profitability." Although Barclays believes that improving operating efficiency will help, the continued expansion of capacity may put pressure on profit margins in the short term. Analysts said, "We are optimistic about Oracle Corporation's long-term story and believe that the current market's negative sentiment towards the stock provides an opportunity for long-term investors, as Oracle Corporation will become a very different company in the future." "Many of the market's concerns are being addressed, such as customer concentration and financing needs, which means that the company's fundamentals should play a more important role again."