Why Oracle stock is up around 3% today

Oracle stock climbed on Wednesday after analysts at Oppenheimer said the stock’s prolonged decline has created an attractive buying opportunity.

Oppenheimer upgraded Oracle to Outperform from Perform and set a price target of $185 in a research note.

The firm said that while Oracle’s heavy investments in artificial intelligence infrastructure may take time to translate into financial returns, the stock’s valuation has fallen to levels that are difficult to ignore.

Oracle shares were up about 3% at $149.45 in early trading.

The stock now trades at roughly 19 times projected earnings over the next 12 months, down sharply from a multiple above 40 times in September.

Oracle stock: from record high to extended slump

Oracle’s shares peaked at a record $328.33 on September 10 after the company announced a $300 billion increase in remaining performance obligations tied to customer contracts.

At the time, investors welcomed the disclosure as evidence of strong long-term demand for the company’s cloud services.

However, it later emerged that a large portion of the backlog was linked to work with OpenAI.

Combined with a broader selloff in technology stocks and concerns about how Oracle would finance its expanding AI infrastructure, the revelation triggered a sustained decline in the share price.

Since then, investor confidence has been weighed down by uncertainty over capital spending requirements, counterparty risk, and the long-term profitability of Oracle’s cloud and AI strategy.

Analyst sees improving risk-reward

Oppenheimer analyst Brian Schwartz said the stock’s sharp multiple compression has shifted the balance in favour of investors.

“While our call may be early, since it will take time for Oracle to show financial success as a more capital-intensive business in future results, we see a favourable risk/reward after the stock’s multiples have been cut by more than half since September,” Schwartz wrote.

He described Oracle as a “superior earnings per share compounder,” arguing that improving profitability should help rebuild investor confidence.

In his base and bull-case scenarios, Schwartz expects Oracle’s earnings per share to double and triple, respectively, by fiscal 2030.

He also said the company is reducing its risk profile, particularly concerns related to its reliance on OpenAI, and that recent funding developments have improved visibility on long-term growth.

OpenAI growth eases concerns

One of the key risks weighing on Oracle has been its exposure to OpenAI, which is a major customer for its cloud infrastructure.

Oppenheimer said those concerns are starting to ease as OpenAI’s business continues to expand.

According to the firm, OpenAI’s weekly user base has re-accelerated to more than 800 million as of early February.

The company is also increasing its focus on enterprise customers and appears to be building its first dedicated sales team.

In addition, OpenAI is widely thought to be nearing a funding round worth around $100 billion, which could further strengthen its financial position and ability to meet long-term obligations to partners such as Oracle.

These developments have reduced fears that OpenAI may struggle to support Oracle’s large-scale data center investments.

Capital spending and financing outlook

Oracle’s transition toward a more capital-intensive model, centred on mass data-centre construction, remains a central issue for investors.

Oppenheimer estimates that Oracle will require approximately $330 billion in capital expenditures through fiscal 2030 to support its AI and cloud ambitions.

While the figure is substantial, the firm said financing risks are becoming more manageable.

Earlier this month, Oracle announced plans to raise between $45 billion and $50 billion through a bond issuance, which is expected to help fund infrastructure expansion.

Schwartz said the company’s recent capital-raising efforts should support cloud growth while limiting balance-sheet strain.

He added that Oracle’s cloud infrastructure business is relatively insulated from AI-driven disruption, given that its non-financial and ERP applications account for only a small share of total revenue.

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