Jefferies analysts have raised their price target on Oracle Corp (NYSE:ORCL, ETR:ORC) to $400 from $360, noting that the company appears poised for a new growth phase driven by artificial intelligence infrastructure.
This represents upside of 28% from Oracle’s share price at the analysts’ time of writing.
The analysts attended AI World and Oracle’s Financial Analyst Day in Las Vegas on Thursday, observing heightened optimism among partners and customers.
“Oracle is entering a new growth phase as it capitalizes on the AI infra supply/demand imbalance,” they wrote after the event, highlighting that the company’s targets signal a growth inflection.
Oracle’s five-year projections indicate a significant expansion across revenue and earnings, they wrote.
Total revenue is expected to reach $225 billion by fiscal 2030, reflecting a 31% compound annual growth rate (CAGR), while earnings per share (EPS) could grow to $21, a 28% CAGR.
Cloud infrastructure (OCI) revenue is projected to rise to $166 billion, implying a 75% five-year CAGR.
Peak revenue growth is anticipated at 53% year-over-year in 2028, with peak EPS growth of 50% expected in 2029.
The company’s remaining performance obligations (RPO) continue to climb, exceeding $500 billion through the first half of Q2.
Oracle also booked $65 billion in additional infrastructure contracts during this period, across seven contracts from four customers, including Meta. Jefferies noted that none of these contracts involved OpenAI.
The analysts noted that Oracle addressed concerns about its AI infrastructure margins, with management clarifying that non-GAAP gross margins range from 30% to 40%, even after accounting for startup costs for new data centers.
Illustrating cost composition, Oracle said that land, data center, and power account for 35% of total costs, while compute, network, and storage represent the remaining 65%.
However, Jefferies cautioned that questions remain regarding Oracle’s capital expenditures needed to support its OCI growth, as management did not provide forward-looking capex guidance during the Analyst Day.
The analysts highlighted the company’s “One-Oracle strategy” as a differentiator, positioning Oracle as an emerging hyperscaler by leveraging its full stack of databases, applications, infrastructure, and AI.
Currently, only 2% of customers use the complete suite, but these customers spend 150 times more than the average client, underscoring the potential upside of deeper adoption, they noted.
After initially rising on the update, shares of Oracle traded down 8% at about $228 late morning on Friday.