Key insights
- Scotiabank raised its price target for Oracle (ORCL) to $290, citing its strong positioning in AI-driven cloud infrastructure. Despite potential overvaluation concerns and cost inflation, the analyst anticipates significant capital expenditure and operating expense savings from headcount reductions. Oracle's GPU-as-a-service capabilities and data center development progress support its growth prospects, potentially influencing investor sentiment towards cloud and AI-related stocks.
Investing.com - Scotiabank raised its price target on Oracle Corp. (NYSE:ORCL) shares to $290 from $215 while maintaining a Sector Outperform rating, the firm said Monday.
The analyst noted Oracle shares rallied 71% over the past three months heading into the company’s fourth-quarter earnings report, scheduled for June 16. The stock has delivered a 50% return over the past year, though InvestingPro analysis suggests the shares may be overvalued at current levels relative to its Fair Value estimate—placing Oracle among companies on the Most Overvalued list. Scotiabank expects management’s fiscal 2027 capital expenditure guidance could approach $100 billion, materially exceeding Wall Street estimates, factoring in approximately 15% hardware inflation.
The firm updated its model to reflect gross margin pressure from cost inflation, offset by approximately $800 million in annualized operating expense savings from Oracle’s roughly 11,000 headcount reduction. Scotiabank’s fiscal 2027 earnings per share estimate increased 1% versus its prior forecast.
Scotiabank said it is not yet changing its fiscal 2027 Oracle Cloud Infrastructure revenue target given the lack of certainty on contract specifics, though Oracle may eventually pass hardware costs to customers. The firm said it feels confident about its OCI estimate given Oracle’s CEO stated that data center development is "on schedule or ahead of expectations."
The firm said it favors Oracle’s structural positioning in the AI-accelerated cloud, supported by its GPU-as-a-service expertise, access to capital, and customer neutrality. Oracle maintains a market capitalization of $713.69 billion with revenue growth of nearly 15% over the last twelve months. For deeper insights into Oracle’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, one of 1,400+ available reports that transform complex Wall Street data into actionable intelligence.
In other recent news, Oracle has been in the spotlight with several developments. Wedbush has raised its price target for Oracle to $275, maintaining an Outperform rating, citing confidence in the company’s strategic positioning within the AI infrastructure landscape. This comes amid concerns about funding for artificial intelligence expansion following Alphabet’s announcement of an $80 billion stock sale, which includes a $10 billion investment from Berkshire Hathaway. Oracle bonds have also been noted to trade tighter than usual compared to its technology sector peers, with a 4.5% bond due in 2028 yielding 64.7 basis points above Treasuries.
Meanwhile, the broader software sector experienced a rally, with companies like ServiceNow and Palantir Technologies seeing significant stock gains, reflecting positive sentiment in the industry. In related tech news, Anthropic reported finding over 10,000 high- or critical-severity software vulnerabilities in the first month of its Project Glasswing initiative. These recent developments highlight the dynamic nature of the tech industry, with Oracle being a key player amid these shifts.
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