Analysts Elevate Oracle’s Long-Term AI Valuation Despite Setbacks

Oracle Corporation (NYSE:ORCL) is garnering attention from analysts who believe the company’s long-term potential in artificial intelligence (AI) is undervalued. On November 26, Deutsche Bank reaffirmed its “Buy” rating for Oracle, setting a price target of $375.00. The firm indicates that while there are risks involved, the market has not fully recognized Oracle’s exposure to OpenAI, a crucial player in the AI landscape.

Recent fluctuations in Oracle’s share prices stemmed from concerns regarding the company’s commitments to AI capacity and its capital expenditure plans, particularly in relation to OpenAI. In light of these issues, Deutsche Bank undertook a comprehensive analysis to better understand Oracle’s financial outlook.

The firm utilized long-term guidance provided by Oracle’s management during the Financial Analyst Meeting in October to estimate the company’s financials for fiscal year 2029-2030, excluding revenues and additional capital expenditures associated with OpenAI. The analysis projected a $4 decrease in earnings per share (EPS) to $17 and a $10 billion reduction in free cash flow (FCF) to $31 billion compared to Oracle’s original guidance. This suggests that Oracle is receiving minimal recognition for its business dealings with OpenAI, especially given that its current share price hovers around $200.

Analysts also raised concerns regarding Oracle’s long-term lease obligations, which the company must honor regardless of the performance of its AI segment. Nevertheless, Deutsche Bank noted that there is considerable flexibility regarding these leases, which could mitigate potential financial strain.

Should Oracle’s financials incorporate estimated lease expenses linked to unrealized business with OpenAI, this could lead to further adjustments. Specifically, analysts estimated that applying a conservative approach might reduce EPS to approximately $15 and FCF to $26 billion.

Oracle Corporation is well established as a key provider of database management and cloud services. While the risks associated with investing in Oracle are acknowledged, some analysts suggest that other AI stocks may present more immediate opportunities for higher returns. Investors seeking alternatives might find reports highlighting stocks with significant upside potential—some suggesting as high as 10,000% upside—worth exploring.

As Oracle navigates the complexities of AI integration and market perception, the company’s long-term strategies and adaptability will be crucial in realizing its full potential in this rapidly evolving sector.