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A reported order cancellation between Oracle (ORCL) and Super Micro Computer (SMCI) gave investors a new reason to question how durable some AI infrastructure relationships really are. Multiple market outlets, citing Bluefin Research, said Oracle canceled an order for 300 to 400 Nvidia GB300 NVL72 racks from Supermicro, a contract estimated at roughly $1.1 billion to $1.4 billion. Neither Oracle nor Supermicro had confirmed the reported cancellation on their investor relations sites as of the latest available company disclosures.Oracle’s own filingsstill show a business with more AI infrastructure demand than it can easily serve. In fiscal third-quarter 2026 results, Oracle reported $553 billion in remaining performance obligations, up 325% year over year, while cloud infrastructure revenue rose 84% to $4.9 billion and total cloud revenue climbed 44% to $8.9 billion.Oracle followed that with a financing plan that said it expects to raise $45 billion to $50 billion in 2026 to expand Oracle Cloud Infrastructure capacity for customers, including OpenAI, Nvidia, xAI, Meta, and others.

Oracle cancels the order of 300-400 chips from Super Micro Computer, and both stocks fall.Shutterstock

Oracle still looks like it has plenty of AI demandThe market does not appear to be treating the reported cancellation as a sign that Oracle’s AI buildout is slowing. Oracle’s own commentary has pointed the other way. In the third-quarter release, the company said demand is outstripping supply in parts of its cloud infrastructure business, and the financing plan made clear that Oracle is still trying to build more capacity for very large contracted customers.The more likely interpretation is that Oracle is making a supplier decision inside a still-expanding infrastructure push. If that is the case, the question for Oracle is not whether demand is there. The question is which partners it trusts to deliver the hardware, timing, and reliability its cloud expansion requires. Oracle’s reported move may have looked like a stock-specific setback in the moment, but the company’s own numbers still support a broader AI growth story.Supermicro has a different problem on its handsSupermicro is far more exposed to the confidence side of the story. In March, the company said it had been informed that the U.S. Attorney’s Office for the Southern District of New York unsealed an indictment against two employees and a contractor tied to an alleged conspiracy to commit export-control violations. Supermicro said it is not named as a defendant and is not accused of wrongdoing, but it also said the alleged conduct violated company policies and compliance controls. In April, the company said an independent investigation overseen by board members and outside counsel was underway.More SemiconductorsAnalysts rerate Taiwan Semiconductor stock after earningsWells Fargo resets NXP Semiconductors forecast ahead of earningsMicron sits at the center of a red-hot chip rallyA supplier can lose one contract and move on. A supplier under a legal and governance cloud risks something more damaging if customers begin to question whether operational or compliance issues could spill into large strategic programs. The Bluefin report cited by market outlets said industry sources believed the Oracle cancellation was related to the indictment, though that claim has not been confirmed by Oracle or Supermicro in company statements.The business numbers still tell two different storiesSupermicro’s own financial results had already shown how much was riding on continued AI demand. In fiscal second-quarter 2026 results, the company reported $12.7 billion in net sales, up sharply from $5.7 billion a year earlier, and said it expects at least $12.3 billion in third-quarter sales and at least $40 billion for fiscal 2026. Management said strong customer engagements and an expanding manufacturing footprint were helping it scale for large AI deployments.Those are powerful growth numbers, but they now sit next to a much messier narrative. Supermicro has been asking investors to value it as a core AI infrastructure winner. A reported order loss tied to trust or compliance concerns puts pressure on that framing because it suggests execution risk may now be part of the investment case in a more visible way. Oracle, by contrast, still has the cleaner demand story, even if its supplier relationships are shifting.The market is pricing a trust discount into SupermicroOracle’s AI ambitions still look enormous by its own numbers, and its capital plan suggests the company is preparing for even more demand ahead. Supermicro still has rapid revenue growth and aggressive guidance. The gap between those two stories is where the market is focusing now. One company still looks like it is choosing among suppliers. The other looks like it is being forced to prove that customers should keep choosing it.If the reported cancellation turns out to be isolated, Supermicro may be able to absorb it as part of a volatile AI hardware cycle. If it signals a broader hesitation among major cloud customers, the stock could face a more lasting credibility problem. Oracle’s challenge is scaling fast enough to meet AI demand. Supermicro’s challenge now includes protecting customer confidence at the same time.Related: Oracle adds $100B in market cap on major announcement

Sometimes the market punishes a company for doing well, and then punishes it a little more for not doing well enough in the future. But most of us know that the market doesn’t really care about anything else that is not numbers. Many would tag it as foul play from the market, but at the end of the day, the market doesn’t care about our feelings toward is at hand.That’s roughly what has happened to RTX Corp (RTX) on April 22, 2026. The aerospace and defense giant reported a genuinely strong first quarter. Sales up, earnings up, guidance raised, and the stock fell 4.4% anyway. Investors weren’t reacting to what RTX did. They were reacting to what RTX might face in 2027, when elevated oil prices and geopolitical uncertainty could cool commercial aftermarket demand.Morgan Stanley (MS) watched that selloff and arrived at a different conclusion than the market did.MS trimmed its price target on RTX to $220 from $235. A mark-to-market adjustment, not a change of heart, while reiterating its Overweight rating and maintaining RTX as its top pick in the entire aerospace sector. The firm’s message to investors was direct.”We view the pullback as a buying opportunity,” Morgan Stanley said in its note, “as upside is underappreciated and valuation is attractive.”RTX Chairman and CEO Chris Calio set the tone heading into that debate. “RTX delivered a very strong start to 2026 with organic sales and adjusted operating profit growth across all three segments, driven by our continued focus on execution and delivering our backlog,” Calio said in the Q126 results statement. RTX’s Q1 2026 earnings beat across every segmentThe numbers RTX posted for the first quarter of 2026 were not ambiguous. According to the RTX’s April 21 earnings release:Sales of $22.1 billion, up 9% year over year and up 10% organicallyAdjusted EPS of $1.78, up 21% year over yearOperating cash flow of $1.9 billion; free cash flow of $1.3 billionCompany backlog of $271 billion, including $162 billion commercial and $109 billion defenseRTX also raised its full-year 2026 outlook. Adjusted sales guidance was lifted to $92.5 to $93.5 billion from $92.0 to $93.0 billion. Adjusted EPS guidance moved to $6.70 to $6.90, up from $6.60 to $6.80. Free cash flow guidance of $8.25 to $8.75 billion was confirmed unchanged, according to the earnings release.That’s a beat-and-raise quarter by any conventional measure. Yet RTX fell 4.4% on the day, underperforming the S&P 500’s 0.6% decline by a wide margin, according to Morgan Stanley’s note. GE Aerospace, which reported the same day, fell 5.6% under similar investor logic.Related: Morgan Stanley resets Microsoft stock forecast ahead of earningsThe market’s concern centers on 2027. Elevated oil prices stemming from the Iran war are raising questions about airline profitability, capacity discipline, and ultimately whether demand for commercial engine maintenance and aftermarket services will soften heading into next year. RTX’s guidance raise was modest relative to the strength of the beat, and management’s cautious commentary on certain aftermarket segments, particularly provisioning and modifications and upgrades, gave investors enough reason to worry.Morgan Stanley’s view is that this concern, while not irrational, is overstated and timing-related rather than structural.

Morgan Stanley trimmed its price target on RTX to $220 from $235LightRocket via Getty Images

Why Morgan Stanley’s $220 RTX target still points bullishThe price target reduction from $235 to $220 deserves context. Morgan Stanley is clear that the cut reflects a mark-to-market valuation adjustment, not a downgrade in conviction.The bank’s $220 target is derived by applying a roughly 30 times multiple to its 2027 estimated free cash flow per share. That’s in line with the average 2027 price-to-free-cash-flow multiple of large-cap commercial aerospace peers Boeing (BA) and GE Aerospace (GE), according to the firm’s note. That multiple carries a four-turn discount to GE and a four-turn premium to Northrop Grumman, reflecting RTX’s positioning between pure defense and pure commercial aerospace.More Wall StreetJPMorgan resets S&P 500 price target for the rest of 2026Vanguard challenges the S&P 500 as a one-stop strategyGoldman Sachs resets Broadcom stock forecastMorgan Stanley flags what it views as a compelling valuation argument: RTX currently trades at approximately a 24% discount to GE on a 2027 price-to-free-cash-flow basis, according to the firm. For a company Morgan Stanley describes as a “high-quality, multi-year growth story with multiple levers for upside,” that discount is the opportunity.The bank modestly raised its 2026 adjusted EPS estimate to $6.90 from $6.80, following the first-quarter results and updated company guidance. Revenue estimates for 2026 through 2028 were increased by approximately 50 basis points, and business segment operating profit was raised by roughly 80 basis points in 2026, per Morgan Stanley’s updated model.Raytheon’s defense momentum at RTX is the growth driverThe market isn’t fully pricing in on this one. While commercial aerospace dominates the near-term narrative around RTX, Morgan Stanley’s most pointed observation is about what the market is missing on the defense side.Raytheon delivered strong outperformance in the first quarter, as seen in Morgan Stanley’s note, supported by strong demand across its portfolio. MS sees clear upside potential tied to framework agreements with the Department of War, capacity expansion, and the approximately $1.5 trillion fiscal year 2027 budget request. None of which is currently embedded in RTX’s guidance.Related: Morgan Stanley resets bets on defense stocks amid warThat’s a meaningful distinction. RTX’s backlog already stands at $109 billion on the defense side alone, according to MS’s earnings release statement. As contracts tied to the DoW budget request become finalized and out-year visibility improves, Morgan Stanley expects defense momentum to become an increasingly visible earnings driver. In fact, for this one, the market isn’t yet paying for.On the commercial aerospace side, the fundamental picture remains intact despite the 2027 noise. RTX benefits from a young installed base of engines requiring consistent maintenance, repair, and overhaul activity, strong original equipment manufacturer production trends, and elevated shop visit demand from the Pratt & Whitney GTF engine fleet.RTX selloff reveals how investors view aerospace in 2026 trendsRTX’s Q1 selloff signals a broader aerospace shift. Investors are discounting the sector amid geopolitical tension, Iran-driven energy volatility, and low confidence in 2027 earnings. GE Aerospace fell more than RTX Corporation despite strong results, showing a blanket discount on commercial exposure as 2027 visibility weakens.Morgan Stanley argues this creates an entry point. RTX’s core drivers, defense demand, a young engine base, steady MRO, and a $271B backlog, remain intact. Near-term pressure from Pratt OE margins and Collins mix is manageable. At 30x 2027 FCF and a 24% discount to GE, RTX stands out as undervalued.Related: Morgan Stanley has a message for ServiceNow investors