After recent volatile sessions, Oracle’s (NYSE: ORCL) share price is surging as investors react to Wall Street’s bullish outlook on the company’s key partnership in artificial intelligence.
As of press time, ORCL stock was trading at $205, up over 4% for the day. Despite today’s gains, the stock remains down roughly 27% over the past month.
The current momentum follows analysts at Deutsche Bank and HSBC defending the stock amid concerns over AI spending and OpenAI commitments.
Deutsche Bank analyst Brad Zelnick noted that even with potential risks, the “bear case looks… bullish,” estimating only modest hits to long-term earnings and free cash flow if OpenAI revenue falls short.
The bank also said Oracle’s data center lease obligations offer flexibility and that the stock is undervalued relative to its AI business.
Deutsche Bank maintained a ‘Buy’ rating on Oracle with a $375 price target, highlighting that the market has yet to fully value the growth potential from this collaboration.
Revenue expansion potential
The firm emphasized that Oracle’s AI and cloud strategy could drive significant revenue expansion, particularly if the company capitalizes on its technological and infrastructure investments faster than competitors.
HSBC also maintained a ‘Buy’ rating with a $382 target, noting that the company is effectively managing AI infrastructure margins and planning to meet its commitments.
Both analysts suggest that market fears may be overstated, with significant upside potential for the stock.
Meanwhile, investment strategist Shay Boloor, in an X post on November 26, explained why the stock has faced recent pressure. He noted that Oracle is undertaking “the most aggressive capex plan in the industry,” funding a data center buildout that is outsized relative to its revenue base.
Additionally, tying roughly $500 billion of future obligations to a single counterparty, OpenAI, introduced a “Sam Altman risk premium” into the market.
Boloor emphasized that while the upside could be enormous if demand holds and Oracle deploys capacity efficiently, balance-sheet and concentration risks are equally significant.
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Source: https://finbold.com/why-oracle-stock-is-surging-today/