"Hundreds of Billions at Stake": CLSA Analyst Cautions on Oracle's (ORCL) AI Cloud Gamble

CLSA analyst Bhavtosh Vajpayee began coverage of Oracle (ORCL) with a Hold rating and a $145 price target, saying the company's big push into AI cloud comes with major financial and execution risks. He said Oracle is trying to move from a classic software business to a full AI cloud provider. The analyst noted a shift could take hundreds of billions of dollars and will require investors to trust the company's long‑term plan.

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Vajpayee said Oracle wants its cloud unit, OCI, to grow from 18% of revenue today to 75% by FY2030, a goal that could demand up to $500 billion in capital and around $400 billion in external funding. He also highlighted concerns about Oracle's heavy reliance on OpenAI, which accounts for roughly half of its order book.

Meanwhile, much of Oracle's older software stack is growing slowly or declining, leaving Fusion and NetSuite as the only bright spots.

The report also pointed to Oracle's huge off‑balance‑sheet lease commitments, about $261 billion tied to long‑term data center arrangements. The analyst sees this as a source of complexity and investor unease.

Further, he said Oracle's valuation does not fully reflect these risks, especially given the company's ambitious guidance for revenue and EPS growth through 2030. With heavy spending needs and a stock that is not cheap for the level of risk, the analyst said a Hold rating is the most balanced call right now.

Burry Cuts His Trade but Keeps His Bearish View

Recently, Michael Burry said he sold half of his January 2027 put options because the position had grown "too big" for his portfolio. He kept the other half, correcting rumors that he had fully closed the trade. The puts, set in the low‑to‑mid $100s, remain highly profitable after Oracle's drop from its 2025 peak.

Burry's bearish view on Oracle comes from two main concerns. First, he argues the company's huge debt load, about $90 billion to $95 billion, limits its flexibility if AI demand shifts or cloud prices fall. Second, he says big tech firms understate how fast AI chips lose value, using longer accounting timelines than their real working life. In his view, this makes earnings look stronger than they truly are.

Is Oracle a Buy, Sell, or Hold?

Nevertheless, Wall Street has a Strong Buy consensus rating on Oracle stock. This is based on the company's steady cloud growth, strong cash flow, and long‑term revenue visibility that outweigh near‑term debt and margin risks.

The rating is based on 28 Buys and four Holds assigned in the past three months. Further, the average Oracle price target of $259.76 per share implies 112.71% upside potential.