Update shared on04 Sep 2025
Fair value Increased 3.61%Analysts highlight Oracle's accelerating AI-driven growth, bolstered by major cloud contracts and robust application demand, though some caution over valuation as these positives appear priced in—leaving the consensus price target unchanged at $244.31.
Analyst Commentary
- Bullish analysts point to Oracle's emergence as a structural winner in artificial intelligence, with unique OCI architecture driving a surge in AI-related demand and a pronounced inflection in growth.
- Several large cloud services agreements—including a high-profile $30B+ annual contract with OpenAI/Stargate—are expected to significantly accelerate revenue through FY28+, solidifying Oracle's position as a top-four hyperscaler.
- Improved outlook for fiscal 2026 and upbeat guidance are underpinned by strong double-digit growth in the applications business, database customer cloud migration, and easing headwinds in legacy units such as Data Cloud and Cerner.
- Industry checks and market signals (such as Microsoft's substantially increased capex and positive CIO spending surveys) support robust demand for Oracle’s AI infrastructure, prompting multiple analysts to increase price targets and upgrade ratings.
- Some analysts remain cautious, highlighting that large contract wins may already be factored into forward guidance and raising concerns about profitability and valuation, even while acknowledging increasing cloud demand and positive sentiment.
What's in the News
- Oracle is investing tens of billions to build extremely large data centers, including a $1B-per-year gas-powered megasite in West Texas, supporting projects for xAI, Nvidia, and OpenAI (Bloomberg, 2025-08-20).
- Oracle will partner with SoftBank and OpenAI on the Stargate data center project in Ohio, intended for AI server manufacturing, following SoftBank’s purchase of the Lordstown plant from Foxconn (Bloomberg, 2025-08-11).
- Despite an ambitious $500B Stargate plan, SoftBank and OpenAI have struggled with execution, but OpenAI has separately struck a major data-center deal with Oracle worth over $30B annually (WSJ, 2025-07-21).
- Oracle's backlog has surged to $138B from $40B year-over-year, driven by growth in AI deals, and the company’s stock price has doubled over two years, including a recent 40% surge (WSJ, 2025-07-16).
- Oracle stands to benefit from both government AI spending—having cloud deals with OpenAI and federal agencies—and a possible stake in TikTok's U.S. operations, amid favorable regulatory developments (CNBC, Reuters, Bloomberg; 2025-08-08, 2025-07-20, 2025-06-23).
Valuation Changes
Summary of Valuation Changes for Oracle
- The Consensus Analyst Price Target remained effectively unchanged, at $244.31.
- The Discount Rate for Oracle remained effectively unchanged, at 8.91%.
- The Net Profit Margin for Oracle remained effectively unchanged, at 24.08%.
Disclaimer
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