One of the reasons Oracle Corp.’s shares are rising is because analysts upgraded the company’s stock because they believe there are more prospects for its extensive cloud and AI infrastructure business.
The excitement surrounding a recently announced cloud partnership and the increasing probability that TikTok would continue to operate in the United States contributed to the 4% increase in Oracle (ORCL) shares during Monday’s trading activity.
Citing the company’s recent “dramatic” rise in capital expenditures and gains from remaining performance commitments, analysts at Stifel shifted to a buy rating for Oracle’s stock in a note released on Sunday. They stated that these factors would support the company’s growth estimates for its cloud business. According to the analysts, Oracle’s software-as-a-service applications and infrastructure would boost overall revenue by roughly 16% in fiscal year 2026 and 20% in fiscal year 2027.
Due to “solid” demand for its infrastructure products, including core compute power and running generative AI workloads, the company’s RPO, or future income that Oracle should get from existing contracts, increased 41% in the last year, according to the analysts.
According to the Stifel team, Oracle’s overall cloud revenue is expected to increase by between 30 and 40 percent over the following two fiscal years, reaching $46.5 billion in fiscal year 2027, which would also account for around “100% of total company revenue growth over that period of time.”
According to the analysts, the cloud provider’s increased capital expenditures will cause its gross margin to contract more in the near future. The “management team at Oracle is extremely adept at managing expenses,” however, they continued. Revenue should also rise “meaningfully faster” than operating expenses as a result of the company’s “greater emphasis on physical infrastructure rather than people to generate new business”
The analysts’ price estimate for Oracle’s stock increased from $180 to $250. Over the last three months, shares have increased by more than 56%, closing Monday’s trading above $218.
Additionally, according to the Stifel analysts, Oracle’s growing collaboration with OpenAI should support the company’s future development in cloud revenue.
Oracle then revealed in a regulatory filing on Monday that it has inked a cloud services contract that, beginning in fiscal year 2028, it anticipates would generate over $30 billion in revenue yearly. According to the filing, Oracle CEO Safra Catz is anticipated to inform staff that the business “is off to a strong start in FY26,” with revenue from MultiCloud databases increasing by over 100%.
In a letter to clients, analysts from Mizuho Securities stated that this update supported Oracle’s “growing role in large-scale cloud and AI infrastructure.”
“This should further [drive] investors’ confidence on Oracle’s growth momentum,” the Mizuho team stated. According to the analysts, management is also expected to increase its fiscal 2029 revenue forecast of $104 billion, which “could be a major catalyst” for Oracle’s shares.
President Donald Trump’s remarks to Fox News on Sunday that he has “very wealthy people” prepared to purchase the social media platform TikTok from its Chinese parent company ByteDance “should give investors confidence that TikTok will continue operating in the U.S., even as the current ownership structure faces mounting regulatory pressure,” according to analysts.
The experts also noted that Larry Ellison, the chief technology officer and co-founder of Oracle, may be one of the prospective bidders for TikTok.
According to the Mizuho analysts, “A resolution that keeps TikTok afloat under new ownership could represent a positive for Oracle,” given that the app is powered by Oracle Cloud Infrastructure. The social networking site “will likely remain a major non-AI OCI customer as long as a competing cloud provider like AWS or Azure is not involved in the eventual buyer group,” analysts at Mizuho stated.
