Investing.com -- Morgan Stanley trimmed its price target on Oracle to $207 from $213 per share in a note Thursday, maintaining an Equal Weight rating as improved execution and broadening demand are offset by unresolved questions around the cost and margin profile of the company's rapidly expanding GPU-as-a-service business.

Analyst Keith Weiss told investors that the firm is "feeling better on execution and demand" following Oracle's most recent quarter, but stresses that "uncertainty persists around GPUaaS cost, financing, and margin profile of ramping GPUaaS business."

Morgan Stanley also maintains a cautious credit view with corresponding trades.

The note identifies four areas where the firm has turned more constructive. First, strong GPUaaS capacity delivery in the third quarter has led Morgan Stanley to revise its fiscal year 2030 GPUaaS earnings power estimate sharply higher, from $1.51 to $2.90 in its base case scenario.

Second, the cloud database business is gaining momentum, with fiscal year 2027 and 2028 revenue estimates revised 3% and 15% higher, respectively, now reflecting a 41% compound annual growth rate from fiscal year 2026 to 2028.

Third, customer concentration risk has improved given strength in AI compute demand and recent customer funding catalysts. Fourth, core earnings power excluding GPUaaS has been revised upward from $8.51 to $9.07.

However, it still sees three key debates remaining, including what the over 10GW buildout will cost and the risk stemming from shell delivery timelines; how Oracle will approach funding the GPUaaS buildout and what the margin profile of “bring your own hardware” deals is alongside the long-term mix.

Oracle expects to bring 10 gigawatts of capacity online over the next three years, an ambition Weiss previously described as offering "big opportunity, little room for error." Non-GAAP gross margins fell short of expectations in the third quarter and continued to decline, leaving the margin trajectory as a key open question.