Bernstein analysts are betting on the growth of technology giant Oracle thanks to the development of cloud business and rapid implementation of solutions in the field of artificial intelligence. The key driver they call a multi-year contract with OpenAI for $30 billion, which should bring the company's cloud division significant revenue from 2028. Against this backdrop, Bernstein recommends buying the company's shares and expects them to grow by almost 22%.

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Analyst firm Bernstein maintained a buy recommendation on shares of technology giant Oracle, believing that advances in artificial intelligence are creating long-term value for the cloud services and infrastructure business, wrote CNBC. Analyst Mark Merdler reiterated an Outperform ("above market") rating on the stock on Aug. 5 and raised his target price from $269 to $308, suggesting upside potential of nearly 22% from current quotes. 

The company's shares were growing by 1.4% on August 5. Since the beginning of the year, Oracle securities have added 54%.

What Bernstein sees as a driver of growth

Oracle's stock has seen steady growth over the past year, and the company appears to be on track to meet its ambitious goals, CNBC writes. In a financial report published in June, Oracle reported that it expects revenue for fiscal 2029 to be above the $104 billion target set in September.

"Oracle is in the early stages of a major transition to the cloud, and [its platform] Oracle Cloud Infrastructure is on track to become the fourth largest global hyper-scale provider, with the pace of growth accelerating," Merdler wrote in a note to customers on Tuesday. 

Oracle in early July contracted a multi-year deal with OpenAI that is expected to generate more than $30 billion in cloud revenue for the company starting in fiscal 2028. With these goals in mind, analyst Bernstein forecasts significant growth in Oracle's revenue and operating margins over the next 5-10 years, which he believes will further boost the company's stock valuation.

"While the bulk of revenue now comes from tasks tied to CPUs (general-purpose central processing units), the recently announced mega-contract should further accelerate growth from AI, creating significant investment opportunities," Merdler added. 

What are other analysts saying?

BofA Securities on August 5 maintained a "Neutral" rating for the tech giant's stock, but raised its target price from $220 to $295 due to optimism about the company's AI infrastructure solutions. The stock has a 16.6% upside potential.

Analysts at Wolfe Research on July 28 reiterated a buy recommendation on Oracle stock (rating of "market perform") and raised their target price from $215 to $300. This implies a potential upside of more than 18%. 

Most analysts who track Oracle stock remain optimistic about the securities, with more than 67% recommending buying (Buy and Overweight ratings), more than 30% recommending holding the securities in a portfolio, and only more than 2% recommending selling them (Sell).

This article was AI-translated and verified by a human editor

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