Oracle (ORCL) stock is inching down on Sept. 24 after the artificial intelligence (AI) giant issued a force majeure notice regarding delays at its major New Mexico data center facility. As the news triggered fresh supply chain and capacity execution concerns, ORCL crashed below its 50-day moving average (MA), indicating bears are attempting to take back control of the near term.
Oracle shares have been under immense pressure in recent months, now down roughly 45% versus their June high.
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www.barchart.comWhat the Force Majeure Notice Means for Oracle Stock
The force majeure notice is a formal acknowledgement from Oracle that it is facing operational or infrastructure delays, ranging from power grid connectivity issues to equipment supply constraints, that halt planned capacity expansion.
For a company relying heavily on a huge multi-billion-dollar backlog of conversions and triple-digit Cloud Infrastructure (OCI) expansion, deferred data center deployments directly threaten revenue recognition timelines.
ORCL shares are slipping as investors view this declaration as evidence that capacity bottlenecks could cap cloud delivery capabilities over upcoming quarters, dampening forward growth outlook and shrinking near-term operating margins.
Why the 10-Year Yield Makes ORCL Shares Unattractive
Compounding company-specific execution snags, macro conditions present a severe headwind for Oracle shares as the U.S. 10-Year Treasury yield surged past 5.168% on Thursday. High risk-free benchmark yields raise the equity risk premium and compress valuation multiples across growth-oriented tech stocks.
With the 10-year yield now at 5%, risk-conscious institutional capital is shifting toward guaranteed bond returns. ORCL is taking a hit also because higher interest rates increase capital expenditure costs for debt-funded infrastructure buildouts.
With the company’s dividend yield trailing around 1.4%, it offers rather limited protection against elevated benchmark rates, which makes the AI stock unattractive for risk-averse investors in the current environment.
Wall Street’s View on Oracle
On the flip side, Wall Street analysts remain convinced that ORCL stock is undervalued at the current price and is poised for an exciting comeback in the months ahead.
The consensus rating on Oracle sits at “Strong Buy,” with the mean price target of about $245 indicating potential upside of roughly 75% from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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