TLDR
- Oppenheimer assigned an Outperform rating to Oracle (ORCL) on Wednesday, establishing a $185 price objective
- Shares declined from September’s peak of $328.33 to approximately $149, reducing the valuation multiple by over 50%
- Brian Schwartz, the covering analyst, identifies attractive risk/reward dynamics with potential EPS expansion of 2-3x by fiscal 2030
- OpenAI’s expansion to 800M+ weekly active users alongside a possible $100B funding round strengthens counterparty confidence
- The company intends to secure $45B–$50B through debt markets to support approximately $330B in capital spending through fiscal 2030
Oracle (ORCL) received a bullish endorsement from Wall Street on Wednesday. Oppenheimer elevated its rating to Outperform from Perform while establishing a $185 price objective.
Brian Schwartz, the firm’s analyst covering the name, drove the rating change. His thesis centers on valuation compression creating an asymmetric opportunity for investors.
ORCL shares climbed roughly 4% during the session after the upgrade surfaced, reaching approximately $149.45 in premarket trading. The current level remains substantially below historical peaks.
Shares reached $328.33 on September 10, 2025. The rally followed Oracle’s disclosure of a $300 billion increase in remaining performance obligations, largely driven by commitments from OpenAI.
A prolonged decline followed that summit. Broader technology sector weakness, uncertainty around capital structure decisions, and doubts about key customer financial stability contributed to negative momentum.
Valuation metrics contracted dramatically. ORCL currently commands roughly 19 times forward earnings, down substantially from levels above 40 times in September.
“Multiples can always go lower,” Schwartz acknowledged in his research. However, he believes the decline “limits the magnitude of the downside at current levels.”
Customer Creditworthiness Concerns Diminishing
A significant portion of bearish sentiment centered on Oracle’s dependence on OpenAI as a critical revenue source. Those worries are moderating.
OpenAI’s weekly active user count re-accelerated beyond 800 million as of early February. The organization is reportedly assembling its inaugural enterprise sales organization while securing commercial agreements.
OpenAI appears positioned to complete a $100 billion capital raise. This development provides greater assurance around the company’s ability to fulfill contractual commitments to Oracle.
Oppenheimer highlighted TikTok as an additional significant customer win that helps diversify counterparty risk.
Capital Allocation Strategy Taking Shape
Oracle’s second major challenge involves funding its infrastructure buildout. Oppenheimer calculates the company requires approximately $330 billion in capital investments through fiscal 2030.
Oracle addressed a portion of this requirement earlier in the month, unveiling intentions to access debt markets for between $45 billion and $50 billion.
This financing strategy directly enables Oracle Cloud Infrastructure expansion, according to Schwartz and his research team.
Using a conservative scenario that applies a 25% reduction to management’s revenue projections, Oppenheimer still forecasts EPS more than doubling by fiscal year 2030. Under an optimistic scenario applying only a 10% haircut, EPS could nearly triple.
Schwartz characterized Oracle as among the strongest EPS growth compounders within large-cap technology through decade’s end.
The firm frames this upgrade as a “contrarian bet.” Institutional ownership remains subdued despite the substantial price decline, the research team observed.
Meanwhile, sell-side consensus already skews positive. Among 45 analysts monitored by FactSet, 78% maintain Buy-equivalent ratings—an increase from 67% when shares peaked in September.
D.A. Davidson executed a comparable move two weeks earlier, raising Oracle to Buy from Hold with a $180 price objective.
Schwartz acknowledged the rating change “may prove early,” characterizing ORCL as a “show me stock” requiring consistent execution to convert skeptical market participants.
