Analysts bump Oracle share targets as mega deals expected to accelerate growth

Investing.com -- Oracle shares received fresh price target raises from analysts at Bernstein and Jefferies on Tuesday.

The analysts pointed to accelerating cloud momentum. They noted that last week, the company said it had signed a single multi-year contract where, starting in FY28, it would generate $30 billion or more in annual revenue.

According to Bernstein, Oracle’s growth story is now shining through what was once considered a defensive stock.

“Oracle has been an extremely controversial stock,” said the firm. However, they noted that “Cloud revenue (now 50% of Software revenue) continues to outgrow other parts of the business.”

They added that the company’s next phase of growth will be driven by “OCI Gen II (including Cloud database&AI)” and its Strategic Back Office businesses. Bernstein raised its target to $269 from $225 and now applies a 31x multiple on FY27 earnings, up from 26.5x.

Jefferies said recent deals (including the more than $30 billion annual revenue contract in FY28) are a “pivotal moment” in Oracle’s evolution as a hyperscaler.

The firm raised its price target for the stock to $270, noting that it implies “32x FY28 GAAP EPS.”

Jefferies emphasized the scale of the recent contracts, saying the $30 billion annual deal alone could account for “over 65% of projected IaaS revenue and nearly 1/3 of total revenue” for FY28.

Analysts highlighted Oracle’s leasing of 4.5 GW of data center capacity to OpenAI as further validation of its AI infrastructure strategy.

With these agreements, Jefferies believes Oracle’s path to its $104 billion FY29 revenue goal is “de-risked,” and the company “remains a standout with no other large-cap software name tracking to 100%+ RPO growth and accelerating rev growth.”

Meanwhile, Bernstein concluded: “While the Street is focused on OCI and AI training revenue, many miss the opportunity of Cloud database and Strategic Back Office.”

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