Oracle stock price target maintained at $225 by Bernstein on AI growth

Investing.com - Bernstein SocGen Group has reiterated an Outperform rating and $225.00 price target on Oracle (NYSE:ORCL), maintaining its positive outlook on the cloud computing giant. According to InvestingPro data, Oracle's stock, currently trading at $229.98, appears overvalued compared to its Fair Value, though the company has shown remarkable strength with a 61% return over the past year.

The firm's analysis follows Oracle's recent announcement of a multi-year cloud contract expected to contribute more than $30 billion in annual revenue starting in fiscal year 2028. This significant deal has intensified market discussions about Oracle's competitive positioning. With a current market capitalization of $646 billion and EBITDA of $23.49 billion, Oracle continues to strengthen its position in the cloud computing market. InvestingPro subscribers can access 20+ additional insights about Oracle's financial health and growth prospects.

Oracle's cloud infrastructure (OCI) business has shown strong growth, shifting investor focus from whether it merely competes as a low-cost alternative to the "big 3" cloud providers to its expanding role in AI and AI training datacenters. Bernstein notes this large multi-year, non-cancelable contract will help drive sustained growth beyond FY28.

The research firm highlights that Oracle's capital expenditure requirements may be lower than market expectations since the company is "likely not renting, building or leasing datacenters." Additionally, Oracle's multicloud database business is growing at over 100% year-over-year, which contributes to both growth and margin improvement.

While Bernstein is not updating its financial model or price target at this time, citing the need for additional analysis, the firm expects Oracle's financial projections to increase and investor confidence in the company to strengthen. The company's revenue has grown 8.38% over the last twelve months, and 12 analysts have recently revised their earnings estimates upward. For comprehensive analysis of Oracle's growth trajectory and valuation metrics, access the detailed Pro Research Report available exclusively on InvestingPro .

In other recent news, Oracle has been making headlines with several significant developments. The company disclosed multiple large cloud service agreements, including one expected to generate over $30 billion in annual revenue starting in fiscal year 2028. This aligns with a potential deal with OpenAI for 4.5 gigawatts of data center power, part of the Stargate initiative, which could significantly boost Oracle's revenue. Analysts from TD Cowen raised Oracle's price target to $275, citing this potential deal as a major growth driver, while BMO Capital increased their target to $245, maintaining an Outperform rating due to Oracle's cloud growth. However, S&P Global Ratings revised its outlook on Oracle to negative, noting that the company's cloud expansion is straining its cash flow and may require increased capital expenditure. Oracle's fiscal 2025 revenues grew by 8.4% to $57.4 billion, with cloud services experiencing a 24% increase. Despite these positive figures, S&P expressed concerns over Oracle's rising leverage and capital needs, which could impact its credit rating. Meanwhile, Citizens JMP maintained a $240 price target, emphasizing Oracle's strong market performance and cloud deals.

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