Citi raises Oracle stock price target to $415 on long-term AI growth

Investing.com - Citi has raised its price target on Oracle (NYSE:ORCL) to $415 from $395 while maintaining a Buy rating, citing the recent pullback as a buying opportunity. The new target represents the highest among Wall Street analysts, with InvestingPro data showing analyst targets ranging from $175 to $415.

The firm noted that Oracle shares have declined more than 10% from recent highs following the company’s first-quarter results, amid concerns about backlog quality, profitability issues highlighted in press reports, and broader worries about AI investment circularity. Despite the recent pullback, Oracle has delivered an impressive 71% return over the past year, with the stock currently trading at $297.

Citi’s analysis suggests a broadening customer base is driving Oracle Cloud Infrastructure (OCI) growth, and expects management to provide more clarity on capital expenditures, financing requirements, and long-term profitability for AI-related projects. The company maintains strong fundamentals with a 70% gross profit margin and nearly 10% revenue growth over the last twelve months.Get deeper insights into Oracle’s financial health and growth prospects with a comprehensive Pro Research Report, available exclusively on InvestingPro, along with 18+ additional investment tips.

While acknowledging that consensus estimates may not fully account for gross margin headwinds, Citi believes the market is underestimating potential operating expense efficiencies at Oracle.

The firm projects a fiscal year 2026-2030 earnings per share compound annual growth rate exceeding 30%, driven by continued operating expense efficiency and GPU gross margins scaling to 35-40% by fiscal years 2029-2030, with the new price target based on approximately 37 times fiscal year 2028 earnings per share of $11.51.

In other recent news, Oracle has been at the center of several developments. Google disclosed that a significant hacking campaign targeted Oracle’s business products, resulting in the theft of large amounts of customer data from numerous companies. Meanwhile, TD Cowen has reiterated its Buy rating and a $375 price target for Oracle, expressing optimism about the company’s upcoming AI World event. Additionally, Oracle announced the launch of its Health Connection Hub, a platform designed to streamline data sharing for U.S. healthcare providers, reportedly reducing processing times for some claims by 50%.

Phillip Securities has initiated coverage on Oracle with a Buy rating and a $350 price target, noting a substantial increase in Oracle’s remaining performance obligations backlog, which reached $455 billion. This growth is linked to significant multicloud partnerships and AI initiatives. Despite these positive outlooks, Oracle faced concerns over the profitability of its GPU-powered cloud services, as reported by The Information. The report indicated that Oracle’s gross margin for these services was 14%, with $125 million in gross profit from $900 million in server rentals for the quarter ending in August.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.