Mackenzie Tatananni
Barron’s
Oct 8, 2025
(Barron’s) — The time has come to buy the dip in Oracle stock, which fell after headlines about the software company’s gross margins sparked concern among investors, analysts say.
Shares ended Tuesday’s session down 2.5% after The Information reported that the company was seeing weakness in margins as it rented out expensive Nvidia chips. The market’s reaction was overblown, Mizuho analysts argued on Wednesday.
The latest chatter is simply “surfacing key debates that we already addressed,” analysts wrote. Worry over the gap between the nearly threefold increase in sales for Oracle’s cloud business, which is tied to the rental of servers powered by Nvidia chips, and the smaller increase in gross profit margin only validates Mizuho’s projections that early-stage AI margins are modest and showing improvement, the analysts argued.
Mizuho expects gross margins to improve, adding that the report, which cites margins in the range of 10% to slightly over 20%, only reinforces the bank’s assumption that Oracle’s gross margins will eventually reach 25%. That trajectory aligns with the pattern of margin improvement historically seen in Oracle’s cloud infrastructure businesses outside of AI, the analysts said.
Moreover, the analysts say, the company’s installation of Nvidia chips at its data centers has gotten more efficient. “Management recently confirmed that they have reduced the handover time for GPU clusters to customer to just one week, enabling faster monetization and mitigating prolonged margin drag,” the bank wrote.
Mizuho is bullish for now, rating Oracle at Outperform with a $350 price target. This suggests 23% upside to Wednesday’s price; the stock was up 0.2% at $284.82 in early trading.
Most on Wall Street are unfazed by the recent discussion. Among 45 analysts tracked by FactSet, 30 rate the stock at Buy or the equivalent. Fourteen rate it at Hold. Just one — Rothschild & Co Redburn analyst Alex Haissl, who initiated coverage on the stock last week — rates Oracle at Sell.