Why Oracle stock is down around 5% on Tuesday

Oracle ORCL shares fell around 5% on Tuesday, putting the stock on track for a third straight session of losses as rising bond yields and renewed inflation concerns pressured technology stocks.

The broader market also declined on the first trading day of September.

The S&P 500 fell 0.3%, while the Nasdaq Composite lost 0.5%. The Dow Jones Industrial Average dropped 221 points, or 0.4%.

Global bond yields continued to rise, with the US 10-year Treasury yield reaching levels not seen since January 2025.

Japan's 10-year government bond yield climbed to its highest level since August 1996, while Germany's benchmark yield reached its highest level since 2011.

Stocks later recovered from their lows as upward pressure on yields eased.

Oracle stock faces pressure

Oracle shares have remained under pressure over the past several months and are down around 4% over the past six months.

TD Cowen lowered its price target on Oracle to $240 from $300 while maintaining a Buy rating ahead of the company's analyst day on October 28.

The firm expects cloud computing to be the main focus of the event and said Oracle is likely to issue updated fiscal 2030 targets.

The company's next major catalyst is its upcoming quarterly earnings report, expected on September 10-15.

Analysts expect Oracle to report earnings per share of $1.67, up from $1.47 a year earlier.

Revenue is expected to reach $19.13 billion, compared with $14.93 billion previously.

Citi sees opportunity after steep selloff

Citi opened a positive catalyst watch on Oracle last week, arguing that the software company's recent share-price collapse could provide an entry point ahead of earnings and the October investor day.

The bank said there is an "opportunity after one of the most extreme dislocations and drawdowns in the stock's history."

Citi attributed the recent pressure partly to investor capitulation and technical selling factors, including credit spreads and at-the-market equity issuance.

Oracle shares have underperformed most large-cap technology peers over the past three months, according to Citi, with the stock suffering a peak-to-trough drawdown of more than 50% within 30 to 40 days.

The bank described the move as four to five standard deviations relative to historical volatility.

Citi said expectations have since reset, with forced selling likely behind the stock and bond and credit default swap spreads recovering.

Cloud demand provides a potential catalyst

Citi also pointed to recent updates from neocloud providers as a potentially positive read-through for Oracle.

The bank said strong demand is driving pricing and margin improvements for neocloud companies and argued Oracle could see similar benefits from newly signed contracts.

Oracle added more than $85 billion in sequential backlog in its May quarter, according to Citi, compared with roughly $9 billion added by the neocloud providers it referenced.

That backlog growth could become an important focus when Oracle reports results later this month, particularly as investors assess whether the company's cloud business can offset the recent pressure on the stock.

For Oracle shareholders, the combination of September earnings and the October analyst day creates two near-term tests for the company's cloud growth outlook.

At the same time, the sharp decline in the stock has left analysts divided between concerns over valuation and expectations for a recovery.