Oracle now a buy as DA Davidson says OpenAI risks are easing

Investing.com -- DA Davidson upgraded Oracle to Buy from Neutral, maintaining a price target of $180 per share in a note on Monday, arguing that the biggest overhang on the company, its exposure to OpenAI, is easing.

Analyst Gil Luria now believes “a revamped OpenAI will return to its position as Google’s top challenger,” adding that a stabilised organisation with fresh capital should “live up to its obligations this year, including to Oracle.”

Luria stated that the market had “overshot to the downside,” noting that concerns tied to OpenAI had weighed not only on Oracle but also on Nvidia and Microsoft.

He highlighted that OpenAI “already has as much as $40B of cash on hand and may be raising as much as another $100B by the end of the quarter,” which he said should support funding for the data centres Oracle is building for the AI developer.

“The market is currently assigning the OpenAI relationship a negative value,” said Luria. “We believe the fundraise will serve as a catalyst for outperformance.”

The firm also cited strength in Oracle’s core software operations, with Luria writing that “software isn’t dead” and that customers “will not be vibe coded away.”

He argued that the core business alone supports the company’s valuation at “18x earnings,” with Oracle Cloud Infrastructure representing “pure upside at this point.”

DA Davidson also pointed to the addition of TikTok USA as another overlooked source of potential value.

However, the analyst cautioned that the situation remains complex, noting Oracle’s “~$130B of debt” and “$248B of operating lease commitments” will burden the company for years to come, putting it in a “precarious position.”

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