Analysts at Jefferies have highlighted Oracle Corp (NYSE:ORCL, XETRA:ORC)’s favorable risk versus reward profile following a recent 32% decline in the company’s shares from their September peak.
The analysts have a ‘Buy’ rating on Oracle and $400 price target, implying upside of 79% from Oracle’s share price at their time of writing.
Oracle has been “the battleground for AI debt concerns,” the analysts noted, with the stock trading at 23x calendar year 2026 earnings before interest and taxes (EBIT), in line with Microsoft, even as it faces the highest concentration risk among cloud providers related to OpenAI.
OpenAI represents 58% of Oracle’s backlog, compared with 39% for Microsoft and 16% for Amazon, highlighting the company’s dependence on the AI partnership for growth.
The pullback has erased approximately $307 billion in market capitalization, more than the reported $300 billion OpenAI contract, reducing the embedded risk associated with the deal, Jefferies noted.
“Even excluding OpenAI, Oracle still have $220 billion in remaining performance obligations, reflecting 60% sequential growth from Q4 2025,” Jefferies wrote.
Debt and capex concerns have also weighed on the stock. Oracle’s net debt stands at $80 billion, with net leverage at 2.5x, leaving some capacity for additional borrowing.
Free cash flow is projected to be nearly negative $10 billion in fiscal 2026 as AI infrastructure spending ramps to support a $166 billion Oracle Cloud Infrastructure (OCI) revenue target by fiscal 2030.
Jefferies highlighted that Oracle’s modular capex model reduces large upfront cash outflows, improves utilization rates, and spreads costs over time, while higher-margin applications and database businesses could help offset rising capital expenditures.
The analysts forecast 27% revenue growth by fiscal 2027, up from 8% in fiscal 2025, even before contributions from the OpenAI deal.