Over the past six months, Oracle’s share price has declined by 11% while the S&P 500 has gained 11%, reflecting growing investor concerns. In its most recent quarter, the company missed revenue estimates and reported negative free cash flow, prompting management to raise its capital expenditure guidance. Oracle’s data center business, which includes a $300 million agreement with OpenAI, operates on thin margins and has been largely financed through tens of billions of dollars in new debt. Additionally, the company carries $455 billion in remaining performance obligations (RPOs), representing contracted future revenue that has yet to be realized, while OpenAI alone has $1.4 trillion in outstanding data center commitments with Oracle.

Despite recent headwinds, leading Wall Street firms Jefferies and Mizuho maintain buy ratings on Oracle, both assigning a $400 price target on the stock. Jefferies values the company at 16 times its enterprise value to 2027 calendar year earnings before interest and taxes, citing the conversion of RPOs into real revenue and the strategic importance of its AI cloud capacity deals. Mizuho highlights Oracle’s vendor financing and GPU rental programs—alongside customer-supplied chip arrangements—as capital-efficient structures that should safeguard the company’s investment-grade credit rating. With the stock trading at approximately 18 times forward earnings, analysts argue the current risk-reward setup is attractive for long-term investors.

Oracle has secured several high-profile partnerships with hyperscalers, positioning itself as a key AI infrastructure provider. The September quarter report surprised the market with “jaw-dropping” guidance on cloud capacity agreements and led to a 40% share rally, though much of those gains have since been pared back. Management is focused on scaling data center capacity to meet insatiable AI demand, integrating its solutions with major enterprise systems, and leveraging its ISO 27001 certification and full GDPR compliance to win large-scale contracts in regulated industries.