Investing.com -- Barclays lowered its price target on Oracle to $230 from $310 in a note on Monday, warning that accelerating AI-related growth will also bring near-term margin pressure.

Analyst Raimo Lenschow told investors that Oracle’s fiscal third quarter should show “a meaningful AI-driven revenue acceleration,” but noted that the same ramp “will likely also pressure margins from upfront costs/timing.”

Lenschow believes AI revenue should be “a little better compared to consensus” as more capacity came online in Q3, and that foreign-exchange trends were “more favorable than guided.”

But he cautioned that gross margins and EPS face headwinds as “upfront investments and lease expense timing for the additional huge capacity ramps in H2 CY26 will create negative timing effects.”

Barclays expects this to leave investors split, writing that “bulls (including us) will focus on the ongoing growing momentum for the company, while bears have at least the margins to pick on.”

The firm added that Q3 “will not be a conclusive quarter either way.”

Lenschow also argued that Oracle’s AI infrastructure build-out is misunderstood, saying investors “need to rethink how they are looking at ORCL and other AI infrastructure players” because major deals are effectively“a series of AI data center agreements requiring a project-finance lens.

He said this structure gives Oracle flexibility to adjust capacity or timelines without committing unnecessary capital.

While sentiment toward AI infrastructure peers has weakened, Barclays maintained an Overweight rating on Oracle, noting a “compelling risk/reward” as Oracle evolves into “a very different company in the future.”