Oracle stock dips on GPU profitability concerns, Stifel sees buying opportunity

Published 10/07/2025, 02:27 PM 

Investing.com - Oracle Corporation (NYSE:ORCL) shares fell Tuesday following an article in The Information questioning the profitability of the company’s GPU-powered cloud services. The tech giant, currently valued at over $807 billion, has seen its stock trade at a notably high P/E ratio of 65.7, according to InvestingPro data.

The report claimed Oracle generated approximately $900 million from rentals of servers powered by Nvidia chips in the quarter ending August, with a gross profit of $125 million, representing a 14% gross margin on these services. This stands in stark contrast to Oracle’s overall gross profit margin of 69.7% across all operations.

Stifel noted this reported margin falls significantly below their forecast of approximately 26% for Oracle Cloud Infrastructure (OCI) gross margins in the first quarter, and below their estimated sequential incremental gross margin of about 25%.

Despite these concerns, Stifel expressed confidence that as Oracle’s OCI segment scales, gross margins should "meaningfully improve" over time, suggesting the current lower margins may reflect new, sub-scale GPU workloads.

Stifel recommended investors use Tuesday’s share price weakness as a "buying opportunity" ahead of Oracle’s analyst day next week, where the firm expects Oracle to provide more details about margin improvement and "significant out-year OPEX leverage."

In other recent news, Oracle reported a significant expansion of its NetSuite SuiteCloud Platform, introducing new AI capabilities that allow for the integration of AI models and the creation of AI-driven workflows. This update includes an AI Connector Service designed to help organizations integrate external AI models while managing their interaction with NetSuite data. Additionally, Oracle NetSuite unveiled the NetSuite Next platform, which embeds conversational AI and automated workflows to enhance business data insights and task management. In terms of company adoption, non-alcoholic beer brand BERO has implemented Oracle NetSuite to streamline operations and support its international expansion efforts. Pet wellness brand PetLab Co. has also seen substantial growth, reaching over $200 million in annual revenue with the help of Oracle NetSuite’s enterprise resource planning system. On the analyst front, Mizuho maintained its Outperform rating on Oracle, suggesting the recent stock decline represents a buying opportunity. These developments reflect Oracle’s ongoing commitment to integrating AI and supporting business growth through its NetSuite solutions.

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