Oracle stock price target raised to $275 from $250 at TD Cowen

Investing.com - TD Cowen raised its price target on Oracle (NYSE:ORCL) to $275 from $250 while maintaining a Buy rating on the stock. The company, currently trading at $229.98 with a market capitalization of $646 billion, has shown remarkable momentum with a 61% return over the past year. According to InvestingPro data, the stock is trading near its 52-week high of $231.90.

The firm’s decision follows an unsubstantiated Bloomberg report about a potential large deal between Oracle and OpenAI through Stargate, a funding vehicle for OpenAI, which aligns with recent comments from Oracle CEO Safra Catz about a significant contract. The potential deal could significantly impact Oracle’s current annual revenue of $57.4 billion, with InvestingPro showing 12 analysts have revised their earnings estimates upward for the upcoming period.

TD Cowen believes the reported deal involves 4.5GW of new datacenter capacity for OpenAI and could generate $30 billion in annual revenue for Oracle by fiscal year 2028, potentially driving Oracle’s total revenue growth to exceed 50% that year.

The analyst suggests this contract could represent a remaining performance obligation (RPO) of $150 billion or possibly higher at $200 billion, with revenue potentially increasing beyond the initial $30 billion annual run rate as more capacity comes online.

Based on these projections, TD Cowen estimates Oracle’s total revenues could reach approximately $150 billion in fiscal year 2029, substantially exceeding management’s previous guidance of $104 billion, with earnings per share tracking toward $15.

In other recent news, Oracle Corporation has signed multiple large cloud services agreements, one of which is expected to contribute over $30 billion in annual revenue starting in fiscal year 2028. This significant development is part of Oracle’s rapidly expanding cloud infrastructure business, which has led to a revision of its outlook by S&P Global Ratings to negative from stable, citing concerns over cash flow. Despite these concerns, Oracle reported strong operating results in fiscal 2025, with revenues increasing by 8.4% to $57.4 billion and cloud services growing 24% to $24.5 billion. BMO Capital raised Oracle’s stock price target to $245, maintaining an Outperform rating, while acknowledging the potential need for new capital to support ongoing financial obligations. Similarly, DA Davidson increased its price target to $220 from $170, following Oracle’s disclosure of a major cloud service agreement, believed to be with ByteDance. Additionally, OpenAI has agreed to rent approximately 4.5 gigawatts of data center power from Oracle as part of the Stargate initiative, highlighting Oracle’s role in supporting AI infrastructure. Citizens JMP also reiterated a Market Outperform rating with a $240 price target, reflecting confidence in Oracle’s cloud deals. These developments underscore Oracle’s strategic focus on cloud growth, despite the associated financial challenges.

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