11:18 AM EDT, 03/24/2026 (MT Newswires) -- Oracle (ORCL) is going all in on cloud and artificial intelligence infrastructure buildout, but faces risks from delayed revenue, customer concentration, and high spending, BofA Securities said in a note Tuesday.

The firm said the main issues are the timing of revenue conversion, since over 57% of the backlog is scheduled beyond three years and 22% beyond five years; customer concentration, with much of the business tied to a few AI players like OpenAI; and capital intensity, as Oracle makes large investments while managing negative free cash flow and rising leverage.

"With the stock down nearly 50% from its peak in September 2025, we believe these risks are already reflected in Street expectations," BofA said.

The firm said it forecast revenue growth of 17%, 33%, and 46% in fiscal years 2026 to 2028 as Oracle Cloud Infrastructure capacity ramps, alongside roughly 1,200 basis points of gross margin compression.

Free cash flow is projected to remain negative through fiscal year 2029 as capital expenditures increase, the firm said. However, front-loaded investments are common during disruptive innovation cycles, so the emphasis remains on performance beyond the investment cycle, according to the note.

BofA reinstated coverage on Oracle with a buy rating and a $200 price target.

Shares of Oracle were down more than 3% in Tuesday trading.

Price: 149.14, Change: -5.20, Percent Change: -3.37