After a nearly 30% plunge in the past month, Oracle's stock price rebounded significantly on Wednesday, rising 6.6% at the beginning of the session, narrowing to less than 5% at midday, and closing up about 4%, moving away from the lowest closing point in over five months set on Tuesday, marking the best single-day performance since October 13.
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Before the stock price surge, recent research reports from Deutsche Bank and HSBC reiterated a buy rating, predicting that the stock still has at least a 90% upside compared to Tuesday's closing price, and is expected to exceed the record high set in September by more than 10%.
Deutsche Bank analyst Brad Zelnick presented an unconventional view: the bearish reasons cited by investors should actually be seen as a positive. He pointed out that even if all OpenAI-related revenue is completely excluded, Oracle's earnings per share (EPS) for fiscal year 2030 would only drop from $21 to about $17, and free cash flow would decrease from $41 billion to $31 billion. Based on the current stock price of about $200, the market has assigned almost no valuation to its OpenAI business.
HSBC also maintained a buy rating and a target price of $382, indicating a 92% upside from current levels. The bank believes that the market is &#34;filling in the blanks on its own in the absence of specific information,&#34; leading to unnecessary panic.
The optimistic expectations from both institutions stand in stark contrast to market concerns regarding Oracle's remaining performance obligations (RPO) exceeding $500 billion and commitments for data center leases. Last month, Oracle disclosed that it secured approximately $65 billion in incremental RPO from seven contracts with four clients, pushing its total RPO over the $500 billion mark.
Wallstreetcn mentioned that in the current AI infrastructure investment boom, RPO is becoming key to understanding the true revenue, growth quality, and potential risks of tech giants. Oracle's RPO astonishingly grew by 411% over the past six quarters. Its massive RPO primarily comes from long-term contracts spanning several years. However, long-term contracts face higher risks of renegotiation. If customer demand or pricing dynamics change in the future, companies may be forced to make concessions on pricing, terms, or service volume to maintain customer relationships.
For companies like Oracle that rely on emerging businesses to drive RPO growth, the costs required to fulfill these large-scale contracts (including infrastructure, personnel, and maintenance capital expenditures) are highly uncertain. This directly affects the ultimate return rates of these contract revenues.
<h2>Deutsche Bank: Bearish Logic Turns Positive</h2>
Deutsche Bank reiterated its buy rating on Oracle with a target price of $375. Analyst Brad Zelnick expects that even if Oracle receives zero additional revenue from OpenAI, the impact would be relatively limited. He estimates that the EPS for fiscal year 2030 would only decrease by $4 to about $17, and free cash flow would drop by $10 billion to $31 billion
Zelnick believes that based on the current stock price of about $200, the market has assigned little to no valuation to Oracle's OpenAI business. Even considering the potential leasing burden associated with unused AI capacity, Oracle's earnings per share for fiscal year 2030 will still be close to $15, with free cash flow around $26 billion.
Deutsche Bank pointed out that while Oracle's deal with OpenAI brings financial and operational risks, these risks are offset by the &#34;very real opportunities&#34; provided by the partnership. The bank emphasized that Oracle's current price-to-earnings ratio of about 27 times seems high due to the initial AI expansion costs, but these costs are temporary, and the real opportunities from OpenAI's backlog should be sufficient to compensate.
<h2>HSBC Maintains High Target Price, Indicates Market Overreaction</h2>
HSBC maintains a buy rating and a target price of $382, implying a 92% upside from current levels. The bank believes that investor concerns about Oracle's over $500 billion RPO stem from a lack of information.
HSBC noted that Oracle has provided guidance for a 30%-40% non-GAAP gross margin for its AI infrastructure business in fiscal year 2030, which is reasonable. Combining low-margin cloud services with slower-growing software business is &#34;just a math problem,&#34; not a danger signal.
The bank believes that Oracle is &#34;skillfully planning to meet these commitments&#34; and is confident that the company is executing its strategy. Both HSBC and Deutsche Bank emphasized that the market is overlooking the bigger picture: Oracle's investment in AI infrastructure is a front-loaded expense, with revenue to be realized later, which is how large infrastructure deals operate.
<h2>DA Davidson Turns Cautious, Questions OpenAI Commitment</h2>
Not all institutions are optimistic. DA Davidson downgraded Oracle's target price from $300 to $200 after the market closed on Tuesday, maintaining a neutral rating.
The bank pointed out that when Oracle released its financial report in September, it hinted that multiple clients drove the growth in remaining performance obligations, but the next day it was revealed that OpenAI contributed almost all of the incremental growth. According to media reports on September 10, OpenAI committed to purchasing $300 billion in computing power from Oracle over five years, the largest single commitment to date, making Oracle appear to be the winner of the bidding.
However, DA Davidson noted that after this announcement, OpenAI's total commitments exceeded $1 trillion, indicating that OpenAI &#34;is not a serious counterparty,&#34; and Oracle is merely a pawn in a &#34;fake it till you make it&#34; game.
<h2>Investors Concerned About Debt and AI Profitability</h2>
Oracle's stock price has fallen about 30% over the past month, plummeting about 41% from its peak in September, primarily due to concerns over its soaring debt and reliance on the massive deal with OpenAI.
The company's debt burden has surged sharply to fund large-scale AI and cloud infrastructure expansion, with Oracle's free cash flow turning negative at about $5.9 billion, marking its weakest performance in decades. Its debt-to-equity ratio is currently far above industry standards, putting pressure on shareholders and bondholders. The cost of default insurance has risen sharply, reflecting a cautious attitude in the credit market
According to reports, loans for data center construction related to Oracle have reached at least $65 billion this year, associated with a $300 billion cloud agreement with OpenAI. This massive borrowing has raised concerns among data center lenders and the credit market. Oracle is preparing a $38 billion debt issuance to build AI and cloud data centers in the United States.
The profitability of the cloud business is also causing concern among investors. The gross margin of the cloud business remains thin, significantly lower than some competitors. The company continues to spend heavily on infrastructure, data centers, and operating costs, dragging down short-term profitability. Some executives even sold shares during the stock price decline, exacerbating concerns that management may not be optimistic about a short-term rebound.
<h2>&#34;Bottom-fishing&#34; faction believes overselling provides entry opportunities</h2>
Although Oracle faces challenges, some analysts believe the stock may have been oversold. Technical indicators show it is currently in an oversold state, which often signals that a rebound may be near.
Analysts supporting the &#34;buy on dips&#34; strategy believe Oracle still has a substantial backlog of AI and cloud contracts, including high-profile deals with OpenAI, which could generate significant revenue if execution and demand remain stable. For long-term investors, this may be a low-entry opportunity before a rebound in stock prices.
Oracle's fiscal year 2025 fourth quarter shows that AI and cloud investments are yielding results. The company's cloud infrastructure revenue surged 52% year-over-year to $3 billion, driven by strong demand for AI workloads and multi-cloud expansion. Remaining performance obligations grew 41% year-over-year to $138 billion, indicating strong order backlog and future revenue visibility.
Among the 45 analysts covering Oracle, 32 have given it a buy or higher rating. The analyst group overall maintains a positive outlook. The company expects cloud growth to exceed 40% in fiscal year 2026, with cloud infrastructure growth exceeding 70%, driven by AI demand.
However, risks still exist. If AI growth slows or cloud demand declines, Oracle may struggle to repay its debt. Short-term volatility may persist, and investors need to closely monitor quarterly performance, cash flow, and cloud revenue trends

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Deutsche Bank believes that investors' bearish reasons should actually be seen as a positive. Based on the current Oracle stock price of around $200, the market has assigned almost no valuation to its OpenAI business. HSBC believes that investors' concerns about Oracle's remaining performance obligations (RPO) exceeding $500 billion stem from a lack of information. The market has "filled in the blanks on its own in the absence of specific information," leading to unnecessary panic

- Oracle's stock rebounded significantly after a nearly 30% drop over the past month, rising about 4% on Wednesday, following buy ratings from Deutsche Bank and HSBC, which predict a potential 90% upside.  
- Analysts express optimism despite concerns over Oracle's rising debt and reliance on OpenAI contracts, highlighting a substantial increase in remaining performance obligations (RPO) and strong demand for AI infrastructure.  
- However, some firms, like DA Davidson, remain cautious, questioning the sustainability of OpenAI's commitments and the impact of Oracle's debt on its profitability.

Oracle surged over 6% during trading, and Wall Street's "bottom-fishing" faction expects the stock price to rebound by 90%