Oracle Stock Spikes as Analyst Turns Bullish, Cites Market- Share Gains in Cloud

Zukin said in a research note that he is increasingly confident that the Oracle Cloud Infrastructure business, known as OCI, “will become the engine that accelerates top and bottom line growth for the company over the next three years.”

He said “architectural cost advantages, intelligent partnerships, and an early mover advantage in [generative AI]” will drive Oracle’s cloud-computing market share to 5% by calendar 2025, from 2% now. 

While Oracle has been talking about the opportunity in cloud computing for several years now, investors are finally listening. The market leaders remain Amazon Web Services, Microsoft Azure, and Google Cloud, but Oracle has now muscled its way into the picture.

The analyst said he isn’t making a call about Oracle’s (ticker: ORCL) results for the fiscal fourth quarter, ended in May. But he did say that a solid fourth-quarter report, together with “AI narrative tailwinds,” could drive the stock’s earnings multiple from the high teens to the mid-20s, putting it in line with other enterprise software stocks.

“While we have spent the last year in a state of heightened skepticism around OCI’s growth opportunity, the consistently improving tone of our checks has become impossible to ignore,” Zukin wrote.

Zukin noted that Oracle offers customers one thing that “every AI startup is asking for today:” spare capacity for graphics processing units, in particular the

Nvidia

chips that have come to dominate the market for creating large language models and running AI software.

Write to Eric J. Savitz at [email protected]