Oracle Earnings Are Here. Investors Want Stargate Updates. — Barrons.com

By Angela PalumboOracle is scheduled to report earnings after the stock market closes on Monday, and Wall Street will be paying close attention to any details the company shares regarding the Stargate deal, along with other signs of artificial intelligence growth.Analysts surveyed by FactSet expect Oracle to post third-quarter adjusted earnings of $1.49 a share on revenue of $14.38 billion. In the same period last year, the company reported earnings of $1.41 a share on revenue of $13.28 billion.Cloud services and license support revenue is expected to grow 13% from the previous year to $11.2 billion.While investors will be looking at cloud revenue growth and whether Oracle beats third-quarter expectations, they will also be looking for any updates on Stargate. Oracle was one of several companies, including OpenAI and SoftBank, to announce the project with President Donald Trump in January, which is an investment of as much as $500 billion in AI infrastructure in the U.S over the next four years."We expect Oracle to provide SOME color around the potential financial impact of Stargate (revs, RPO [remaining performance obligations, capex) on the call, which we believe has the potential to outweigh everything else on this call," UBS analyst Karl Keirstead wrote in a note on Thursday.Keirstead, who rates Oracle as a Buy with a $210 price target, also wrote that it is unclear how the rollout of Stargate and the potential need to invest more in AI hardware to support the project, such as GPUs, will impact Oracle's capital expenditures. Chief Executive Safra Catz already said on the company's last earnings call that she expects fiscal 2025 capex will be double what it was the previous year.Keirstead wrote that if the revenue upside from Stargate is material and "incremental to the existing guide, then we suspect investors would have SOME tolerance for a higher projected capex level."Despite the Stargate project and expectations earnings and revenue grew last quarter, Oracle stock has dropped 11% this year, compared with the 3.8% drop of the S&P 500 index. Many tech stocks have been hit by investors taking a more risk-off approach, selling previously strong performers amid continued economic uncertainty. Oracle shares have climbed 30% over the last 12 months.One major concern on Wall Street is Trump's trade policy, and what tariffs could mean for different industries. For software and information tech, there is a risk of customers pulling back their budgets as the economic environment remains uncertain.However, Deutsche Bank analyst Brad Zelnick, who rates the stock as a Buy with a $200 price target, wrote in a note on Friday that tariff volatility "has yet to result in any material impact based on our conversations, and customers were said to be increasingly confident engaging in longer-duration OCI [oracle cloud infrastructure] commitments for both AI and non-AI workloads."Investors may get more color on tariff impacts tonight.Shares of Oracle were falling 4% on Monday amid a broader market sell-off, with the tech-heavy Nasdaq Composite index down 3.3%.Write to Angela Palumbo at angela.palumbo@dowjones.comThis content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.