Oracle (ORCL) shares fell nearly 7% on Friday, wiping out Thursday’s gains, as investors reacted cautiously to the company’s long-term AI infrastructure profit projections.
During a Thursday presentation, Oracle said its AI infrastructure business — which rents computing power from its data centers — is expected to achieve 30–40% gross profit margins by 2030. That’s a significant jump from the 16% margin recently reported by The Information for Oracle Cloud Infrastructure (OCI).
The company also raised its 2030 revenue target to $166 billion, up from its earlier goal of $144 billion, implying a 75% compound annual growth rate (CAGR) over five years. Shares initially rose 3% on the news, but analysts quickly raised concerns.
Jefferies’ Brent Thill noted that Oracle’s lack of detail on capital expenditures (CapEx) made it unclear how the firm plans to meet AI demand. He warned that CapEx will have to grow significantly, questioning Oracle’s financing strategy — especially after it raised $18 billion in debt in September.
JPMorgan’s Mark Murphy added that Oracle’s revenue growth projections appear to slow sharply toward 2030. He cautioned that the ambitious guidance may be setting expectations too high given the industry’s mixed record in delivering on long-term forecasts.Despite the decline, Oracle shares remain up nearly 75% year-to-date, supported by its growing role in the AI cloud market alongside Microsoft, Amazon, and Alphabet. The company also holds a $300 billion partnership with OpenAI for their U.S. data center project, Stargate.