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On Thursday, Piper Sandler reaffirmed its Overweight rating on Oracle stock with a steady price target of $190.00. According to InvestingPro data, Oracle, currently valued at $409 billion, is trading above its Fair Value, with analysts’ targets ranging from $135 to $246 per share. The reaffirmation came after analysts attended an Oracle Cloud Infrastructure (OCI) event, which included a tour of a new AI data center and discussions led by Executive Vice President of OCI Development, Clay Magouyrk. The event highlighted Oracle’s continued momentum in AI, showcasing a significant investment in a data center designed to support a substantial GPU cluster.
The new facility, built to accommodate a 25,000 node GPU cluster, represents Oracle’s commitment to overcoming the challenges associated with the infrastructure needed for new AI workloads. The analysts noted the complexity of the data center’s infrastructure, which includes power, switching, routing, optical, compute, storage, security, cabling, racks, cooling fans, and diesel generators.
The discussions at the event also provided insight into Oracle’s cloud growth, with the company’s cloud Revenue Performance Obligations (RPO) increasing by 90% year-over-year last quarter. This growth contributes to Oracle’s overall revenue of $55.78 billion, representing a 6.23% year-over-year increase. Notable customer examples cited by Oracle, such as Meta (NASDAQ:META), OpenAI, Palantir (NASDAQ:PLTR), CrowdStrike, Vodafone (NASDAQ:VOD), Uber (NYSE:UBER), and Toyota (NYSE:TM), were indicative of the OCI platform’s differentiation in the market. InvestingPro subscribers can access detailed analysis of Oracle’s growth metrics and 12+ additional ProTips about the company’s performance.
Oracle’s adoption of OCI has reportedly reached a critical mass, surpassing a $10 billion run-rate milestone, which accounts for 19% of the company’s sales. This milestone was achieved for the first time in the last quarter, with demand outpacing supply, potentially leading to over 50% year-over-year growth at scale.
Despite the positive outlook on Oracle’s AI and cloud growth, Piper Sandler’s commentary indicated that there are still unanswered questions regarding the company’s margins. The firm did not elaborate on these concerns but maintained its positive rating and price target for Oracle stock, traded on the New York Stock Exchange under the ticker (NYSE:ORCL). The company maintains a strong gross profit margin of 71.12%, though it trades at a relatively high P/E ratio of 33.17. For a comprehensive analysis of Oracle’s financial health and valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Oracle Corporation has reported a second cybersecurity breach within a month, involving the theft of old client log-in credentials. The incident is under investigation by the FBI and cybersecurity firm CrowdStrike Holdings (NASDAQ:CRWD) Inc. Oracle informed clients that the compromised system was a "legacy environment" unused for eight years, although some data reportedly dates back to 2024. Additionally, Oracle has been highlighted in analyst reports, with KeyBanc Capital Markets maintaining an Overweight rating and a $200 price target, citing Oracle’s strong focus on AI and cloud infrastructure. Bernstein analysts also kept an Outperform rating with a $207 target, emphasizing Oracle’s growth potential in cloud and AI capabilities. Guggenheim reiterated a Buy rating with a $220 target, noting Oracle’s competitive edge in AI workloads and profitability despite lower margins. Furthermore, Oracle is part of a consortium, including Andreessen Horowitz, aiming to acquire TikTok from ByteDance. This move seeks to separate TikTok from its Chinese owners, addressing regulatory concerns in the United States.
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