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Investing.com - Wolfe Research has reiterated its Outperform rating and $400 price target on Oracle (NYSE:ORCL), now valued at $892.3 billion, following the company’s AI World event, which the firm described as "a capstone moment in an already momentous month." According to InvestingPro data, Oracle’s stock has delivered an impressive 144% return over the past six months, reflecting strong investor confidence in its AI initiatives.
The research firm highlighted Oracle’s significant upward revision of its top-line forecast, projecting $43 billion higher cumulative Oracle Cloud Infrastructure (OCI) revenue from FY26-30, representing a 75% compound annual growth rate (CAGR). Oracle also surprised with earnings projections, including a 28% EPS CAGR for FY25-FY30 and a $21 EPS target by FY30. Current revenue growth stands at 9.67%, with the company generating $59.02 billion in the last twelve months. For deeper insights into Oracle’s growth metrics and over 30 key financial indicators, check out the comprehensive analysis available on InvestingPro.
Oracle reported securing $65 billion in new revenue performance obligations (RPO) from seven large deals across four customers, helping the company surpass its half-trillion backlog target ahead of schedule. This achievement supports Oracle’s increased growth outlook, which now targets $225 billion in revenue by FY30.
The firm noted that Oracle provided details on AI infrastructure delivery economics, stating these result in 35% gross margins over contract lifetimes, with first-year margins impacted by capacity build-out costs before recovering. Oracle maintained that 30-40% gross margins over contract terms apply consistently across its customer base.
A Wolfe Research survey of over 90 Oracle customers revealed significantly increased spending intentions compared to last year, with 65% expecting to increase spending versus 44% last year, and 30% anticipating a significant increase compared to just 4% last year. On-premises to cloud transitions are driving these spending expectations, with 56% of non-OCI customers planning to adopt OCI due to cloud transitions. This positive sentiment aligns with Oracle’s strong market performance, as InvestingPro data shows an 89.7% year-to-date return. While the stock currently trades at a P/E ratio of 72.46, suggesting premium valuation levels, InvestingPro’s analysis indicates the company maintains a "GOOD" overall financial health score.
In other recent news, Oracle has made several significant announcements and received notable analyst updates. The company unveiled long-term guidance, projecting fiscal year 2030 revenue of $225 billion, with a compound annual growth rate (CAGR) of 31%, and earnings per share of $21, reflecting a 28% CAGR. Oracle also increased its Oracle Cloud Infrastructure (OCI) forecast to $166 billion, anticipating approximately 75% CAGR. Barclays raised its price target for Oracle to $400, citing strong momentum in Oracle’s infrastructure-as-a-service (IaaS) business, highlighted by $65 billion in total contract value signed in the second quarter. Evercore ISI also increased its price target to $385, maintaining an Outperform rating, while Citizens reiterated its Market Outperform rating with a target of $342, emphasizing Oracle’s strategic position in AI workloads. Additionally, Mizuho Securities clarified Oracle’s AI gross margins, expected to range between 30% and 40%, following comments from Oracle’s CEO. Oracle executives have also reported robust growth in their distributed cloud offering, which is expanding at a 77% year-over-year rate.
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