12:22 PM EDT, 06/10/2024 (MT Newswires) -- Oracle's (ORCL) fiscal Q4 checks indicate mixed demand trends, though Oracle Cloud Infrastructure demand seems "healthy," and optionality exists around its artificial intelligence workloads, Morgan Stanley said Monday.

The software maker is scheduled to report fiscal Q4 results Tuesday.

"While we picked up signs of macro impact on the (software-as-a-service) business in our channel checks, the broader demand trends seem to remain relatively consistent and near-term outperformance in our view is primarily driven by AI infrastructure capacity," the brokerage said in the note.

Morgan Stanley said that while it doesn't have a view on the exact timing for more capacity to come online, it sees positive optionality in the near term and expects shares to be further rewarded, according to the note.

The brokerage said the upgrade patterns of Oracle's current customers are mostly unchanged as they are reconsidering their database needs in the context of GenAI, with the growth in software licenses slowed down in recent quarters despite the company launching Database 23ai in Q2.

Morgan Stanley has an equal-weight rating on the Oracle stock, with a $115 price target.

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