The gains came against a softer broader market, with the SPDR S&P 500 ETF Trust slipping 0.12% on the session. Cloud infrastructure names rose despite the weaker tape, as investors extended their AI infrastructure exposure across both hyperscale and pure-play GPU cloud names. No dedicated cloud sector fund carried a same-day figure, so the broad-market benchmark alone anchors the framing contrast for Tuesday’s session.

The Morgan Stanley price target raise served as the immediate catalyst for Tuesday’s move, reigniting enthusiasm across GPU cloud peers and validating the market’s AI infrastructure spending case. The raise lifts sentiment around Oracle’s cloud pipeline heading into a fresh reporting window, giving investors renewed conviction in the company’s ability to monetize its aggressive infrastructure expansion.

Strong Earnings Backdrop Supports Rally

Oracle’s most recent quarterly results provide a constructive fundamental backdrop for the bullish case. The company’s Q4 FY2026 report on June 10 showed Cloud Infrastructure revenue climbing 93% year over year to $5.79 billion, demonstrating accelerating demand for computing capacity tied to artificial intelligence.

The company’s Remaining Performance Obligations surged 363% to $638 billion, providing a clear indicator of future demand already represented in contracted business. That RPO figure includes $75 billion tied to prepaid or customer-supplied GPU AI contracts, a detail that has become a critical component of the investment case because it points to sustained revenue visibility.

Oracle’s management confirmed a $90 billion FY2027 revenue target and raised non-GAAP EPS guidance to $8.05, giving investors concrete metrics to evaluate whether the company’s current infrastructure spending can translate into sustained revenue growth rather than simply creating additional capital requirements. Those figures form the basis for assessing whether accelerating demand for AI computing can justify the heavy capital spending required to expand cloud capacity.

Capital Plan Remains Key Bear Case

The bullish AI infrastructure narrative comes with a significant financing challenge that represents the primary bear case against the stock. Oracle plans to raise approximately $40 billion through debt and equity during fiscal 2027, an aggressive capital-raising plan that will test investor appetite for funding rapid cloud infrastructure expansion.

The company’s free cash flow stood at negative $23.7 billion for FY2026 on $55.7 billion of capital expenditures, underscoring the financial strain of building out AI cloud capacity at scale. A Morgan Stanley re-rating tells investors the sell-side is now willing to underwrite that capital plan against expected AI cloud revenue growth, marking a shift in sentiment around the sustainability of Oracle’s infrastructure spending trajectory.

Year-to-Date Performance Diverges Across AI Names

Oracle stock remains down 14% year to date through Monday’s close, so Tuesday’s gain reads as a recovery move off a weak year rather than an extension of existing momentum. The stock’s negative year-to-date performance contrasts sharply with its strong fourth-quarter results, suggesting investors had been questioning the company’s ability to convert infrastructure spending into profitable revenue growth.

Meanwhile, CoreWeave stock was up 28% year to date before Tuesday’s session, so its participation extends an already strong 2026 performance. The divergence between Oracle’s year-to-date decline and CoreWeave’s gain illustrates how investors have differentiated between pure-play GPU cloud providers and broader hyperscale cloud platforms when allocating capital to AI infrastructure themes.

The Morgan Stanley catalyst appears to be narrowing that performance gap, at least in the near term, as the price target raise validates both Oracle’s specific cloud pipeline and the broader AI infrastructure spending case. Whether Tuesday’s rally reflects genuine conviction or a short-term narrative reset remains to be determined, with the next earnings report likely serving as a more important test of the company’s AI cloud growth story.

Next Earnings Report Will Provide Critical Test

The latest move comes ahead of Oracle’s next earnings report, which could provide a more important validation of the company’s AI cloud growth story than Tuesday’s price target-driven rally. Investors will be watching cloud revenue, remaining performance obligations, and the company’s ability to fund its aggressive infrastructure expansion without diluting existing shareholders or taking on excessive debt burdens.

The company’s ability to demonstrate sequential improvement in free cash flow generation will be particularly important, given the negative $23.7 billion figure for FY2026. If Oracle can show that its cloud infrastructure revenue growth is beginning to offset the capital intensity of building GPU capacity, the bull case gains credibility. If free cash flow remains deeply negative despite strong revenue growth, questions about the sustainability of the business model will persist.

The $90 billion revenue target for FY2027 represents a significant step-up from current levels and will require consistent execution across multiple quarters. Management’s ability to deliver on that target while managing the $40 billion capital raise and maintaining investor confidence in the long-term profitability of AI cloud infrastructure will determine whether Tuesday’s rally marks a turning point or simply a brief reprieve in a difficult year for the stock.

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Morgan Stanley initiated coverage of SpaceX (SPCX) on Tuesday with an Overweight rating and a $300 price target, marking the most bullish call among Wall Street’s biggest investment banks. The move comes as SpaceX joins the Nasdaq 100 index, cementing its position among America’s most prominent publicly traded companies. Lead analyst Adam Jonas delivered the target in a note titled “AI’s Final Frontier” that landed Tuesday morning, implying 87% upside from Monday’s close of around $160.

The Morgan Stanley team argues SpaceX holds an “X of 1” position in space infrastructure. The firm frames the rocket launch company as one that can transform energy into intelligence through data centers using solar power. Jonas highlighted the company’s “near-monopoly launch economics, the world’s largest LEO satellite network, and a fast-scaling AI infrastructure business,” describing them as one integrated infrastructure stack. The lengthy research note structures SpaceX into four distinct operational areas that together form the basis for the ambitious valuation.

Starship Launch Economics Drive Future Growth

The launch business depends heavily on the development of Starship, SpaceX’s largest rocket to date. Jonas expects the vehicle to become operational in the fourth quarter of this year. Launch costs should fall to roughly $500 per kilogram by 2030 and under $150 by 2040. This dramatic cost reduction accompanies a massive ramp in operational capacity, with total Starship launches scaling from 46 in 2027 to more than 6,000 annually by 2040.

The Morgan Stanley team sees the Starlink network evolving into the default connectivity layer for virtually every device beyond the reach of terrestrial infrastructure. This satellite constellation represents a critical component of SpaceX’s long-term revenue model, extending internet access to remote regions and mobile platforms globally. The firm believes this connectivity advantage will drive substantial recurring revenue streams as adoption accelerates across consumer, commercial, and government sectors.

Terrestrial AI Data Centers Offer Hidden Value

Morgan Stanley contends the market underappreciates SpaceX’s data center economics, particularly in what the firm calls “terrestrial AI” or land-based data centers. The firm estimates cost per watt at half the industry average, excluding chips. Deployment speeds run six to eight times faster than peers thanks to vertical-integration initiatives. These initiatives include Terafab for chip building and Solarfab for solar equipment, giving SpaceX competitive advantages in both cost structure and time-to-market.

The enterprise AI segment represents the fourth pillar of Morgan Stanley’s SpaceX thesis. The firm sees “neocloud rental deals” – including recent agreements with Anthropic and Google – giving way over time to more comprehensive end-to-end AI services. The $60 billion Cursor acquisition stands out as an asset the market has yet to fully price, with annual recurring revenue of $4 billion, up from around $500 million a year ago.

Revenue Projections Reach Trillion-Dollar Territory

Morgan Stanley projects SpaceX revenue climbing aggressively from $45 billion this year to $319 billion in 2030 and $3.3 trillion by 2040, with operating margins approaching 59%. These forecasts depend on SpaceX inventing entirely new markets for connectivity and physical AI services that do not exist today. Jonas concedes this point, acknowledging the speculative nature of the long-term projections while maintaining confidence in the company’s execution capabilities and market positioning.

UK Assembles Major Taskforce for Tokenization Push

In a separate but equally significant financial markets development, the United Kingdom is pushing tokenization harder in a bid to integrate the technology with wholesale financial markets through an HM Treasury initiative. The group includes over 50 financial firms such as BlackRock, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, and UBS. Chris Woolard, HM Treasury’s Wholesale Digital Markets Champion and former FCA chair, leads the initiative designed to position London at the forefront of financial innovation.

The 54-firm group, backed by the City of London Corporation, will spend the next year working on live tokenization use cases across UK financial markets. The initial focus centers on tokenized repo, according to the first of two reports by Woolard’s office. This practical approach aims to demonstrate real-world applications rather than theoretical frameworks, potentially accelerating institutional adoption of blockchain-based settlement systems.

Tokenization Market Could Reach $88 Trillion

The stakes in the race to tokenize financial markets are substantial. Estimates by Boston Consulting Group suggest the tokenized real-world assets (RWA) market could reach $88 trillion by 2035. That figure would dwarf the current crypto and stablecoin market of $3 trillion, representing a nearly 30-fold expansion over the next decade. Other jurisdictions including the United States and European Union are examining how to integrate tokenization into traditional finance, creating a competitive dynamic among global financial centers.

John Orchard, chairman of the Digital Monetary Institute at OMFIF, an independent research group for central banking, economic policy, and public investment, views the UK government’s commitment as potentially critical to London’s survival as a financial center. He highlighted what he sees as the most material distinction from other jurisdictions in an email statement.

“I would say the most material and interesting distinction from e.g. Europe or US is the commitment of the government to issue its own debt in DLT form (DIGIT), so that there is a high quality ‘safe’ asset to start to build a wholesale capital market around. This is meaningful and useful,” Orchard said via email.

Productivity Gains Drive UK Government Support

The main opportunities center on productivity and cost efficiencies which could benefit global trading centers like London. The UK government’s assumption that prowess in this area is no longer a niche sport represents a significant shift in policy thinking, according to Orchard. By committing to issue government debt in distributed ledger technology (DLT) form through the DIGIT program, the UK aims to create a high-quality “safe” asset that can anchor a broader wholesale capital market built on tokenization infrastructure.

The convergence of SpaceX’s ambitious space infrastructure plans and the UK’s tokenization push illustrates how traditional and emerging technologies are reshaping financial markets. Both initiatives depend on long-term vision, substantial capital investment, and willingness to build entirely new market structures. Whether Morgan Stanley’s $300 SpaceX target or the $88 trillion tokenization market materializes remains to be seen, but institutional commitment from major banks and governments signals serious intent behind both transformative opportunities.

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