MW Can Oracle's stock finally stage a comeback? Why one analyst sees 'pure upside' from here.
By Christine Ji
Oracle shares have been battered by OpenAI jitters and a broader software selloff, but one analyst argues the market has overcorrected
With OpenAI potentially raising another $100 billion by the end of the quarter, analysts believe a significant overhang could be lifted from Oracle's stock.
Shares of Oracle have been stuck in a downward spiral for months, but the tide may finally turn for the software and cloud giant.
Oracle's $(ORCL)$ stock has plunged roughly 60% from its September peak - currently trading at $143 - primarily due to concerns about the company's high-stakes relationship with OpenAI, and, more recently, a broader selloff in the software sector. "We believe the market has overshot to the downside," D.A. Davidson analyst Gil Luria wrote in a Monday note.
Investors have grown increasingly nervous about whether the AI startup can live up to its massive financial obligations, including the billions of dollars in data centers Oracle is building on the ChatGPT creator's behalf. OpenAI has also faced increasing competition, especially from Google's $(GOOGL)$ (GOOGL) Gemini offering.
Also clouding over Oracle shares is the fear that people will be able to use artificial intelligence to "vibe code" replacements for traditional enterprise software.
But Luria just upgraded Oracle's stock to buy from neutral and maintained his $180 price target, arguing that OpenAI has made strides to improve its business model in recent months.
See more: Oracle's stock suffers worst eight-day stretch in over two decades. Here's why.
"We believe that a revamped OpenAI will return to its position as Google's top challenger," Luria wrote, noting that the startup appears to have "corrected several missteps" by focusing on its core frontier models and exploring advertising-based monetization. Luria estimated that OpenAI already has roughly $40 billion of cash on hand and could raise as much as $100 billion more by the end of the quarter. The capital influx would be a major catalyst for Oracle, as the market seems to have ascribed "negative value" to the OpenAI relationship, Luria noted.
At current levels, Oracle's core software business accounts for the company's entire valuation at 18x earnings, Luria wrote, meaning that Oracle Cloud Infrastructure "represents pure upside at this point."
OCI is expected to account for the majority of Oracle's future revenue acceleration, and management has guided for 71% annual revenue growth, with a revenue target of $144 billion by fiscal year 2030.
Luria said the core software business would also benefit as the narrative of "AI eating software" is debunked. Luria's price target of $180 implies a valuation of 23x 2027 earnings.
There's another lever for Oracle that Luria noted: the recently completed U.S. TikTok joint venture, in which Oracle has a 15% stake. Luria said that Oracle's ownership stake in TikTok could be worth $5 billion to $9 billion, and the agreement locks in a major customer that already generates roughly $1 billion in annual OCI revenue.
Luria's caveat was that Oracle isn't a "clean" story, writing that "the company has put itself in a very precarious position and will have to execute well to get out of this predicament." Oracle has accumulated $130 billion in debt and $248 billion in operating lease commitments to finance the expansion of its OCI business.
Last week, Oracle announced plans to raise up to $50 billion through stock and debt issuances this year. "We are relieved the company said the current $45 to $50 billion raise will be the last for the year," Luria wrote. He also cautioned that the equity issuances associated with the raise could lead to selling pressures in the near term.
More: Nvidia and Oracle are flashing similar warning signs about the AI trade
-Christine Ji
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February 09, 2026 10:00 ET (15:00 GMT)
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