What Oracle needs to do to get on Wall Street’s good side

Yahoo Finance Video and Julie Hyman

December 12, 2025

In this video:

ORCL

-5.40%

Oracle (ORCL) stock is plunging after the company’s earnings release disappointed Wall Street.

D.A. Davidson’s head of technology research, Gil Luria, joins Market Catalysts to discuss what Oracle needs to do to get back on track.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

What choice does Oracle have? You know, as you say, you’re suggesting they they should reset expectations, which would presumably cause an even bigger re-rating in the stock, which is the trickiness you allude to. Um, but at the same time, you know, when you look at their spending plans, for example, when you look at them chasing this market, it feels like they don’t necessarily have an alternative because of the competitive landscape right now. Or do you say, well, they don’t really need to be in this market as aggressively as they are?

00:33 Speaker B

Yeah, I mean, I think the the way out they had yesterday, it’s a very narrow way, but I actually think the way out yesterday would have been to say, we’re not going to raise any more capital. We have capital, we’re going to deploy it. as the customer uh continues to pay for it, that capacity, then we’ll reassess to decide if we can uh borrow more and deploy more capital. That was a that would have probably been the way out of this.

01:05 Speaker B

which isn’t to say Oracle is in distress. You know, there’s a lot of conversation about CDSs. Oracle isn’t in distress. They have a core business that’s very profitable. They can pay for the loans they’ve, uh, they’ve made. And by the way, if they build out capacity and Open AI doesn’t materialize, they’ll be able to sell that capacity. This isn’t a matter of distress, it’s a matter of setting unreasonable expectations that everybody knows are unreasonable and sticking with them.

01:28 Speaker A

Um, and and sort of reflected that, you you have a neutral rating on this stock. You do not have an underweight rating on this stock.

01:35 Speaker B

Yeah, because again, there is a there is a viable business underneath all this story. There’s a database business that’s very high margin. It’s declining, but it’s very high margin. And then there’s an OCI business, an Oracle cloud business that is a good business. that that has tenant customers like Zoom communications and by dance and is going to have a bigger role when Tik Tok USA uh is formed. That’s a good business. And by the way, some of the AI Oracle cloud business is is an okay business. That’s renting capacity to real customers like meta and X that are creditworthy. Um, so there is a good underlying business here. They just really need to manage this risk around Open AI in a better way, which is to say just reduce the expectations that this will materialize or at least carve off a first year and say, first year we know we’ll deliver this capacity, we know that they’ll pay for it and then we’ll reassess.

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