The rapid rise in Oracle shares amid strong demand for artificial intelligence has analysts on Wall Street racing to raise their target prices. Most of them believe that the record rally is far from over. After the "historic" quarter, investors are waiting for Oracle's event in October, where the company plans to unveil a new AI-based service.

Details

On Sept. 10, Oracle shares soared 36% in New York trading to a record closing high of $328.33 - following the release of a quarterly report that Deutsche Bank described as "truly outstanding" and "confirming the company's leadership in AI infrastructure."

"In the nearly 20 years that we've been analyzing Oracle and the software industry as a whole, we've seen extremely few quarterly reports comparable in both the magnitude of expectation revisions and the significance of the moment," the bank stressed, pointing out that Oracle's order book more than quadrupled to $455 billion in the quarter.

Wall Street analysts reacted to the surge in Oracle stock with a series of revised estimates. Banks showed a rare unanimity:

- Citi upgraded the rating from Neutral to Buy and set the market's highest target at $410. Even after the securities surged on September 10, this target price implies the upside potential of another 25%;

- BofA also raised its rating to Buy with a $368 benchmark;

- UBS raised its target to $360 (Buy rating);

- Jefferies - also up to $360 (Buy);

- Stifel - up to $350 (Buy);

- Evercore ISI - up to $340 (Outperform);

- Piper Sandler - up to $330 (Overweight).

- Even Wall Street's largest bank, JPMorgan Chase, which is cautious in its valuations, improved its target price to $270 (18% lower than the current price), calling the performance of the new contracts "stellar."

Citi analysts said they will closely monitor the company's upcoming event, at which Oracle co-founder and CTO Larry Ellison promised to unveil a new AI service. In turn, JPMorgan noted that questions remain about Oracle's "customer concentration risk" and whether customers will be able to pay off $455 billion in orders.

Context

The growth in Oracle's order book that stunned Wall Street is attributed to four multibillion-dollar contracts signed last quarter. CEO Safra Catz told investors that she plans to finalize several more such agreements in the coming months. One of those clients could turn out to be OpenAI. According to The Wall Street Journal's sources, the ChatGPT creator has leased computing power from Oracle for five years, starting in 2027, and will pay $300 billion for it.

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

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