Oracle's Stock Surges Toward Its Best Day Since 2021. Why We May See More Gains in the Future.

In a challenging year for software stocks, Oracle Corp. has outperformed its peers, with recent results suggesting this trend may continue, according to analysts.

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"Oracle shares have significantly outperformed their peers year-to-date, and we remain optimistic," wrote Evercore ISI's Kirk Materne. He was encouraged by Oracle’s forecast for accelerating revenue growth throughout the new fiscal year, the potential for positive fiscal 2026 guidance updates at Oracle's analyst day in September, and the company's AI partnerships.

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On Tuesday, Oracle announced that OpenAI would be utilizing Oracle Cloud Infrastructure and revealed a new deal with Alphabet Inc.'s Google Cloud. "The OpenAI deal highlights Oracle’s competitive price/performance for training AI models compared to other platforms," Materne commented.

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An upcoming partnership with Amazon Web Services is also possible, and Materne considers Oracle shares attractive, trading at 18.9 times the estimated earnings per share for calendar 2025. He maintains an outperform rating and has raised his price target to $160, up from $145.

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Oracle shares jumped 12.3% in morning trading, on track for their largest single-day percentage increase since a 15.6% rally on December 10, 2021.

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Guggenheim’s John DiFucci noted that Oracle is excelling in a challenging market. "Although Oracle faces a difficult IT spending environment, it stands out as one of the few companies likely to accelerate growth during this period," he wrote. DiFucci reiterated his buy rating and “best idea” designation for Oracle shares, highlighting growth acceleration in remaining performance obligations as a positive indicator. He raised his price target to $175 from $150.

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Bernstein’s Mark Moerdler praised the progress of Oracle Cloud Infrastructure, with consumption revenue up by 53%. "The momentum is clear, and since Oracle Cloud Infrastructure is central to Oracle's strategy, this is a positive sign for both the near-term and long-term future," he wrote. Moerdler has an outperform rating on Oracle’s stock and increased his price target to $171 from $159.

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JPMorgan’s Mark Murphy, however, remained cautious. "It is encouraging that Oracle is guiding for double-digit revenue growth in FY25, though part of this is due to the total revenue miss in Q4 creating easy comparisons," he noted. Murphy pointed out Oracle's tendency to fall slightly short of expectations. For example, "based on previous analyst meetings’ ambitious targets, Oracle was not expected to grow by just 4% in constant currency in Q4 this year."

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Murphy holds a neutral rating with a target price of $110, up from $105.

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In summary, despite a tough year for software stocks, Oracle Corp. has managed to outperform its peers, driven by strong cloud infrastructure growth and strategic AI partnerships. Analysts remain optimistic about the company's future, with some raising their price targets in light of recent performance and projected growth. However, a note of caution remains due to Oracle's historical tendency to slightly underperform against high expectations.

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