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Investing.com - Oracle (NYSE:ORCL) maintained its Perform rating from Oppenheimer on Wednesday as analyst firm cited impressive first-quarter results while noting concerns about capital expenditures. According to InvestingPro data, Oracle’s stock has delivered a remarkable 46% return year-to-date, though current valuations suggest the stock is trading above its Fair Value.
Oracle began fiscal year 2026 with accelerating top-line growth and record sales performance across several key metrics including RPO, Cloud Revenue, OCI, and multi-cloud database revenue, according to Oppenheimer’s analysis. The company’s revenue grew 9.67% over the last twelve months to $59.02 billion, maintaining its position as a prominent player in the software industry.
The strong quarterly performance supported a significant increase to Oracle’s medium-term OCI growth guidance, reinforcing the company’s position as a software leader in the AI transition and as a market share gainer among large enterprises.
Despite these positive developments, Oppenheimer highlighted that increased capital expenditures to support RPO growth are consuming Oracle’s free cash flow generation, which negatively impacts the company’s cash efficiency and margin profile. InvestingPro subscribers can access 15+ additional investment tips and comprehensive financial metrics to better evaluate Oracle’s financial health, which currently rates as "GOOD" in their analysis.
The research firm indicated that investors will likely overlook these near-term financial metric headwinds, as Oracle’s OCI estimates are rising significantly due to backlog growth, with the material OCI guidance increase supporting higher multiples for the stock. The company maintains strong profitability with a gross margin of 69.66%, though it currently trades at elevated earnings and EBITDA multiples.
In other recent news, Oracle’s fiscal first-quarter 2026 earnings report has spurred a series of analyst upgrades. Wolfe Research raised its price target to $400, citing extraordinary growth in cloud infrastructure driven by artificial intelligence demand. Oracle reported that its remaining performance obligations (RPO) tripled to $455 billion, with significant contracts like the Stargate project contributing to this growth. Mizuho also increased its price target to $350, emphasizing Oracle’s 359% year-over-year growth in RPO, positioning it as a key AI infrastructure provider.
Barclays followed suit, raising its price target to $347, noting the substantial increase in RPO due to large AI contracts. Guggenheim raised its price target to $375, highlighting Oracle’s innovative history and recent technological advancements. DA Davidson, while maintaining a Neutral rating, increased its price target to $300, describing the earnings as "largely in-line" with expectations. These developments reflect Oracle’s strategic focus on AI and cloud infrastructure, which are driving its impressive financial performance.
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