On Tuesday, Jefferies reaffirmed its Buy rating on Oracle Corporation (NYSE:ORCL) with a price target of $150.00. The endorsement comes despite news that Oracle and Musk's xAI have ceased discussions regarding a potential $10 billion deal for AI servers.
The analyst highlighted that Oracle's robust performance is expected to continue, with the company not having factored the potential deal into its reported Remaining Performance Obligations (RPO), which reached $98 billion and grew 44% year-over-year in the fourth quarter of fiscal year 2024.
Oracle has shown resilience, with demand remaining exceedingly strong and its sales pipeline expanding more rapidly than both bookings and revenue. This positive outlook is set against the backdrop of the halted negotiations with xAI. The focus now shifts to the August quarter, where the company's performance will be closely watched by investors and industry observers.
The firm's analysis suggests confidence in Oracle's ability to achieve its projected financial targets, including $65 billion in revenue and a 45% operating margin by fiscal year 2026. Oracle's ability to sustain growth and demand in its services, irrespective of the outcome with xAI, appears to be a key factor in Jefferies' continued support for the stock.
Oracle's current trajectory, as outlined by Jefferies, indicates a strong position in the market. The growth in RPO and the acceleration of the sales pipeline, even without the xAI deal, underscore the company's momentum and potential for future performance.
Investors are advised to keep an eye on Oracle's forthcoming financial results in the August quarter, which will provide further insights into the company's progress toward its ambitious revenue and profit margin goals for the coming years.
In other recent news, Oracle Corporation's AI platforms, Foundry and Artificial Intelligence Platform (AIP), have been certified on Oracle Cloud Infrastructure (OCI), enhancing AI capabilities for businesses and governments globally.
Oracle has also launched HeatWave GenAI, a feature designed to simplify the development process for generative AI applications, now available across all Oracle Cloud regions. Moreover, Oracle has committed to investing over $1 billion in Spain's tech growth over the next decade, focusing on expanding its AI and cloud computing services.
Several analyst firms have adjusted their outlook on Oracle's shares. BMO Capital Markets maintained its Market Perform rating but increased the price target to $160, reflecting Oracle's strong performance in cloud infrastructure bookings.
Mizuho raised its price target to $170, following a significant uptick in Oracle's AI bookings. Deutsche Bank (ETR:DBKGn) also raised its shares target to $165, aligning with its updated financial model that includes Oracle's fourth-quarter results and guidance.
Oracle's partnerships with OpenAI and Google (NASDAQ:GOOGL) Cloud are expected to extend its cloud infrastructure offerings to a broader customer base. These are among the recent developments for Oracle Corporation.
InvestingPro Insights
Oracle Corporation's (NYSE:ORCL) recent performance metrics provide a deeper insight into the company's financial health and market position. With a robust market capitalization of $388.36 billion, Oracle stands as a significant player in the technology sector.
The company's P/E ratio, sitting at 36.81, indicates a high valuation by the market, which aligns with Jefferies' confidence in Oracle's growth trajectory. Moreover, Oracle's revenue has shown a healthy growth of 6.02% over the last twelve months as of Q4 2024, further reinforcing the company's strong financial standing.
Investors may also be interested in the company's return metrics, with a 1-month price total return of 15.18% and a 3-month price total return of 17.69%, reflecting a positive short-term investment outlook. These returns complement the analyst's view of Oracle's resilience and growth potential.
For those seeking further analysis and insights, InvestingPro offers additional tips on Oracle, including its consistent dividend growth and analysts' upward earnings revisions for the upcoming period. For more detailed information and to access a comprehensive list of 17 InvestingPro Tips for Oracle, investors can visit https://www.investing.com/pro/ORCL. To enhance your investment research, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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