Oracle Corp (NYSE:ORCL, XETRA:ORC) has been awarded an ‘Outperform’ rating from Wedbush in their initial coverage on the company, with analysts citing expectations that the company is entering a major expansion phase driven by demand for artificial intelligence infrastructure.
Shares of Oracle are currently trading at around $170, placing the new target roughly 30% above recent levels.
Wedbush characterized Oracle as being in the early stages of a “backlog-driven AI expansion cycle,” arguing that the company is increasingly positioned as a key infrastructure provider for AI workloads.
The firm highlighted Oracle’s cloud business, particularly Oracle Cloud Infrastructure (OCI), as a central driver of future growth due to its architecture, which it described as optimized for high-performance, low-latency computing required for large-scale AI model training.
The report also pointed to Oracle’s growing focus on integrating artificial intelligence with enterprise data through its database offerings, including its newer AI-enabled database products. Wedbush suggested this strategy could help differentiate Oracle in a competitive cloud market by enabling customers to more directly apply AI models to proprietary datasets.
“The secret sauce is Oracle’s two-pronged strategy of superior infrastructure and data integration,” they wrote.
The analysts highlighted Oracle’s expanding backlog, with Remaining Performance Obligations (RPO) cited at approximately $553 billion. Wedbush argued that this backlog provides visibility into future revenue and supports the company’s elevated capital spending levels.
Concerns around Oracle’s increased capital expenditures and negative free cash flow were acknowledged but described as reflective of near-term investment rather than structural weakness.
They noted that Oracle is funding its infrastructure expansion through a mix of debt issuance and convertible securities, with approximately $30 billion already raised as part of a broader $45 billion to $50 billion capital plan.
Wedbush also referenced Oracle’s partnerships in the AI ecosystem, including collaborations with major technology firms such as NVIDIA and OpenAI, as well as participation in large-scale initiatives aimed at expanding AI infrastructure capacity.
“As Oracle continues to convert its backlog into revenue, we expect the market narrative to shift from focusing on capex risk to the durable, long-term growth story that is unfolding,” Wedbush concluded.