Are Oracle bears too pessimistic? This analyst thinks the stock can rise 90%.

By Emily Bary

A Deutsche Bank analyst sees 'limited additional downside' for the stock even under 'draconian' assumptions - and big upside if the company starts capitalizing on its opportunity

Oracle's stock has come well off its highs, but most equity analysts are still bullish.

The bears have won out on Oracle's stock lately, but one analyst thinks the powerful recent selloff just means more opportunity for buyers.

Oracle (ORCL) has become a battleground stock in the months since the company pointed to a swelling book of artificial-intelligence business, largely geared around a big opportunity to provide cloud services to OpenAI. The stock's sizable initial boost has melted away, fueled by concerns over OpenAI's ability to follow through on its commitments and Oracle's ability to pay for them.

Deutsche Bank's Brad Zelnick is sticking with his upbeat view of Oracle's stock, however, and the recent selloff means his $375 target price implies roughly 90% upside from here.

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"While we appreciate the financial and operational risks, our view is that these are much more than offset by the very real opportunity as OpenAI backlog represents solid [return-on-investment] business, continues to advance as planned and validates Oracle's leadership in deploying AI cloud infrastructure at scale," Zelnick wrote in a Monday note to clients.

With a share price near $200, the company "is getting little if any credit for its business with OpenAI," he added.

Zelnick sought to understand the risk-reward balance around Oracle's stock. One investor concern, he noted, is that the company sits on "significant long-lived lease obligations" and would likely still be on the hook for many of them regardless of how the AI scene shakes out.

Even in a "draconian scenario," in which the company forfeited all incremental AI revenue beyond fiscal 2026 but was still subject to 50% of its contracted lease payments, his model arrives at $12 in earnings per share for fiscal 2030 as well as $12 billion in free cash flow. When discounting those to the present day, that implies "limited additional downside from current levels" for the stock, Zelnick wrote.

Equity analysts are largely bullish on Oracle's stock, as 32 of the 45 tracked by FactSet have buy-equivalent ratings.

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But on the credit front Morgan Stanley's Lindsay Tyler was less encouraged in a note last week that focused on Oracle's debt.

"We reiterate our view that risks skew to the downside for [Oracle]credit," she wrote on Wednesday. Key concerns include counterparty risk around OpenAI, an expansion of the balance sheet and "no communicated financing plan."

She noted that "bondholder sentiment has shifted this fall as a result of the hyperscaler mega bond deals, which offer investment alternatives though at a spread premium, and raise questions on long-term capex and debt needs in the broader ecosystem."

And worries about the credit picture have weighed on Oracle's stock, she added, which could prompt management to give more details on funding plans on the next earnings call.

"While such communication might potentially support bonds at current levels, we also can't rule out that it could underwhelm, excitement may fade (similar to the past couple months), or updates may be delayed," Tyler wrote.

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-Emily Bary

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12-01-25 1251ET