The **Oracle stock outlook** is looking brighter, according to one analyst, who sees “pure upside” from here. Oracle’s (ORCL) shares have been battered recently, plummeting roughly 60% from their September peak, currently trading around $143. This downturn is attributed to concerns regarding OpenAI’s financial obligations and a broader software selloff.
D.A. Davidson analyst Gil Luria upgraded Oracle’s stock to buy from neutral, maintaining a $180 price target. He believes the market has overcorrected, creating a buying opportunity. Investors have been worried about OpenAI’s ability to meet its financial commitments, including the billions invested in Oracle’s data centers. Concerns also arose from increasing competition, particularly from Google’s Gemini offering, and the fear that AI could replace traditional enterprise software.
“We believe that a revamped OpenAI will return to its position as Google’s top challenger,”
A Bullish Oracle Stock Outlook
Luria believes that OpenAI’s focus on its core frontier models and exploration of advertising-based monetization will help the company regain its competitive edge. He estimates that OpenAI has roughly $40 billion in cash and could raise another $100 billion by the end of the quarter. This capital influx would be a significant catalyst for Oracle, as the market seems to have assigned “negative value” to the OpenAI relationship. Also, you can read related Finance news here.
Oracle Cloud Infrastructure: A Key Growth Driver
At current levels, Oracle’s core software business accounts for the company’s entire valuation at 18x earnings, meaning that Oracle Cloud Infrastructure (OCI) “represents pure upside at this point,” according to Luria. OCI is expected to drive the majority of Oracle’s future revenue growth, with management guiding for 71% annual revenue growth and a revenue target of $144 billion by fiscal year 2030. This positive **Oracle stock outlook** hinges on the continued success of OCI.
TikTok Stake Adds Further Upside
Another potential catalyst for Oracle is its 15% stake in the recently completed U.S. TikTok joint venture. Luria estimates that Oracle’s ownership stake could be worth $5 billion to $9 billion. The agreement also secures a major customer that already generates roughly $1 billion in annual OCI revenue.
Risks and Cautions
Luria acknowledges that Oracle isn’t without its challenges. The company has accumulated $130 billion in debt and $248 billion in operating lease commitments to finance the expansion of its OCI business. Oracle recently announced plans to raise up to $50 billion through stock and debt issuances this year, which could create near-term selling pressure. However, the **Oracle stock outlook** remains positive due to the potential of OCI and OpenAI.
Source: MarketWatch
