Oracle stock rating reiterated as Buy by UBS with $380 price target

Investing.com - UBS has reiterated its Buy rating on Oracle (NYSE:ORCL) with a price target of $380.00, following analyst Karl Keirstead’s attendance at Oracle’s AI World event. The software giant, currently valued at $785.71 billion, maintains a strong "Buy" consensus among analysts, with targets ranging from $175 to $430. According to InvestingPro data, 8 analysts have recently revised their earnings expectations upward for the upcoming period.

The UBS analysis highlighted several key observations from customer and partner interactions at the event. Unlike previous Oracle gatherings, most customers expressed intentions to grow their Oracle investments, while partners reported accelerating growth rates. UBS noted an absence of customers expressing desires to move away from Oracle’s platforms. This positive sentiment aligns with Oracle’s strong financial performance, having achieved a 69.32% return over the past year and maintaining a healthy 69.66% gross profit margin.

UBS also identified a significant sales reorganization at Oracle this year that has reportedly resulted in a more customer-friendly approach. Despite speaking with large Oracle Cloud Infrastructure (OCI) customers who were still scaling up their usage, UBS found no substantial evidence of major migrations from competing cloud providers AWS, Microsoft Azure, or Google Cloud to Oracle.

The analysis revealed high interest in migrating Oracle databases to Microsoft Azure, though these transitions are taking longer than anticipated. Most customers now expect to begin such migrations in the second half of 2026 or in 2027, rather than on earlier timelines.

While customer deployments of AI agents remain in early stages, UBS observed increased interest in Oracle’s Fusion AI features. Customers confirmed that Oracle plans to start charging for these features that were previously offered at no cost, with one customer noting that "the free party is over." Trading at a P/E ratio of 64.18, Oracle appears overvalued according to InvestingPro Fair Value analysis. Discover 16 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription, including detailed insights from our Pro Research Report covering Oracle’s AI initiatives and growth prospects.

In other recent news, Oracle has been actively involved in various developments. The company announced a collaboration with Baylor College of Medicine to advance research on alcohol-related liver disease, utilizing Oracle Health’s AI data platform to establish a significant ALD cohort. In another move, Oracle Health was selected by Sunnybrook Health Sciences Centre to implement a new AI-powered electronic health record system, aiming to streamline patient information and communication across its facilities.

Oracle has also enhanced its Public Safety Suite with AI-powered analytics and voice command capabilities, designed to assist law enforcement and first responders. Meanwhile, JPMorgan downgraded Oracle’s credit rating to Neutral from Overweight, citing the substantial costs and limited visibility associated with Oracle’s AI expansion plans. On a more positive note, TD Cowen raised its price target for Oracle to $400, maintaining a Buy rating based on a strong AI outlook and exceeding revenue and earnings projections for fiscal year 2030. These developments highlight Oracle’s strategic focus on AI and its implications for various sectors.

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