TLDR
- Oracle closed Tuesday at $117.98, down 1.51%, then showed $123.60 in premarket trading.
- Bernstein reiterated Outperform with a $325 target, more than 2.7 times the close.
- The firm named the OpenAI IPO and a free cash flow turn by fiscal 2028 as catalysts.
- Reports of a lost Tencent deal and a Microsoft pullback add pressure.
- The stock sits below its 50-day and 200-day averages and well off its $250.25 high.
Oracle (ORCL) stock closed Tuesday at $117.98, down 1.51%. Premarket trading on Wednesday showed $123.60, a jump of 4.76%.
Bernstein reiterated its Outperform rating and $325 price target. That target sits about 175% above Tuesday’s close.
The stock is far from its 52-week high of $250.25. At the current price, it has lost a little more than half its value from that peak.
Bernstein called Oracle the most controversial name it covers. The firm also said it draws more inbound calls than any other stock it follows.
Investors see the potential, Bernstein said, but they are still working out how likely it is and when it could arrive.
Two Catalysts Bernstein Is Watching
Bernstein updated its 10-year Oracle model with management’s latest guidance. The firm said the economics look better than it first thought.
The first catalyst is the OpenAI IPO. It would show whether OpenAI and the wider Gen AI industry can pay for the computing power they have committed to.
The second is Oracle returning to positive free cash flow by the second half of fiscal 2028. Bernstein expects more data to back up the quality of the business over time.
The firm also made a case for Oracle as a go-to name if fears grow that AI will hurt software. It pointed to the AI datacenter business and the core database business.
Oracle posted 21.6% revenue growth over the last twelve months. Analysts forecast 34% growth for fiscal 2027.
Investing.com lists the PEG ratio at 0.42, while MarketBeat shows 0.84. Both figures come from different data sets, so readers will want to check which one they trust.
Oracle last reported on September 10, with EPS of $1.92 against a $1.74 estimate. Revenue came in at $19.34 billion, up 29.6% from a year earlier.
Wall Street Views and Trouble Spots
Analysts lean positive, per MarketBeat. One rates the stock Strong Buy, 37 say Buy, five say Hold and three say Sell, with a consensus target of $249.27.
Stephens upgraded Oracle to Overweight with a $213 target after the company’s investor day. Scotiabank set a $205 target and kept its Sector Outperform rating.
Bloomberg reported that 65% of Oracle’s recent $10 billion stock offering went to its top 10 investors. Demand ran well above what was available.
Reports say Oracle lost an estimated $7 billion Tencent chip-leasing deal. Microsoft is also reportedly winding down an AI-computing arrangement because Oracle’s older Nvidia chips no longer fit its needs.
Oracle said renewed rentals of older GPUs were priced at a premium. Coverage also notes that its AI backlog leans heavily on OpenAI.
The stock trades below its 50-day average of $137.85 and its 200-day average of $154.83. Its 52-week low is $109.21.
This week, Oracle broke ground on its future Nashville global headquarters. It also launched AI-assisted treasury and customer analytics apps for financial institutions.
