Oracle's stock zips toward best day since 2021. Why more gains may be in store.

By Emily Bary

Analysts like cloud partnerships and growth

Against a dim backdrop for software stocks this year, Oracle Corp. has beaten the pack, and many analysts say the company's latest results show why that trend could persist.

"While Oracle shares are meaningfully outperforming peers [year-to-date], we remain bullish," Evercore ISI's Kirk Materne wrote. He's encouraged by the company's projection for accelerating revenue growth throughout the new fiscal year, the potential for upbeat fiscal 2026 guidance updates when Oracle (ORCL) hosts an analyst day in September and the company's artificial-intelligence partnerships.

See more: Oracle's stock soars as upbeat guidance, Google deal outweigh earnings miss

The company noted Tuesday that OpenAI would be using Oracle Cloud Infrastructure, and Oracle also signed a new deal with Alphabet Inc.'s (GOOG) (GOOGL) Google Cloud. "In our view, the OpenAI deal is an interesting comment on Oracle's price/performance relative to other platforms for training AI models," Materne wrote.

Opinion: Oracle's cloud AI deals excite investors, but do they have long-term potential?

Meanwhile, an Amazon Web Services partnership could be on the horizon, and he still views the shares as attractive, trading at 18.9 times estimates for calendar 2025 earnings per share. Materne has an outperform rating and fresh $160 target price on the stock, up from $145 before.

Shares of Oracle are ahead 12.3% in morning action and on track for their largest single-day percentage rise since the 15.6% rally seen Dec. 10, 2021.

Guggenheim's John DiFucci said that Oracle stands out in a tough market. "It's a difficult IT spending environment and Oracle is not immune to this, but there are few names out there at this time that will likely accelerate growth during this period, in our view," he wrote. "Oracle is one at scale, which is impressive regardless of how you look at it."

See more: Chip stocks now dominate S&P 500 index for first time

DiFucci reiterated his buy rating and "best idea" designation on Oracle shares, writing that he's enthused by "bright" forward indicators like growth acceleration in remaining performance obligations. He also boosted his price target to $175 from $150.

Bernstein's Mark Moerdler also cheered the traction for Oracle Cloud Infrastructure, as consumption revenue grew 53%.

"The momentum is clearly visible, and being that it is the core of the Oracle story (as mentioned above), this is a great sign that bodes well for both the near-term and long-term future for Oracle," he wrote.

Moerdler has an outperform rating on Oracle's stock and raised his price target to $171 from $159 following the report.

JPMorgan's Mark Murphy, however, stayed on the sidelines.

"It is encouraging that Oracle is guiding to double-digit revenue growth in FY25, though we note this is partly enabled by the total revenue miss in Q4 creating easy [comparisons]," he wrote.

Plus, "Oracle has a tendency to fall a little short of expectations," in Murphy's view. For one, "based upon ballistic commentary and aggressive targets set at prior analyst meetings, we don't think Oracle was supposed to be growing 4% [in constant currency] in Q4 this year."

He has a neutral rating and $110 target price on Oracle's stock, up from $105.

-Emily Bary

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06-12-24 1030ET

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