MW Is Oracle the next big cloud giant? Why these analysts think the stock can rally nearly 30% from here.
By Christine Ji
The company lays out an aggressive new forecast, with a path to nearly quadrupling revenue by fiscal 2030 and a backlog that has already crossed the $500 billion mark
Oracle put a key investor concern to rest Thursday, revealing that its closely watched AI infrastructure margins are much stronger than thought.
Oracle Corp. looks like it's on track to become the next artificial-intelligence juggernaut.
The company gave updated guidance during its AI World conference on Thursday, showing investors that it has plans to aggressively expand its AI infrastructure and software offerings. Oracle $(ORCL)$ expects to grow revenues at a 31% annual rate, reaching $255 billion by fiscal 2030. Its remaining performance obligation, or the backlog of orders placed with the company that it hasn't fulfilled yet, recently crossed $500 billion.
In a note Friday, Guggenheim analyst John DiFucci called Oracle a "decade stock" in the making. DiFucci, along with Jefferies analyst Brent Thill and Melius Research analyst Ben Reitzes, each maintained their buy-equivalent rating and raised their price target to $400 for Oracle. That implies a 27% upside to Thursday's closing price of $313.
Driving these price-target increases was Oracle's announcement Thursday of gross margins in the 30% to 40% range for its cloud-infrastructure business segment. This had been a topic of concern for analysts after recent media reports of gross margins in the mid-teens.
Oracle's growing backlog, which now includes seven new contracts with four different customers, was another bullish signal for analysts. Among other hyperscalers such as Alphabet Inc. $(GOOGL)$ $(GOOG)$, Amazon.com Inc. (AMZN) and Microsoft Corp. $(MSFT)$, Thill estimates that Oracle has achieved the dominant position for backlog market share at 40%. The runner-up is Microsoft, with 31% market share.
There were still some areas that Oracle didn't address in detail, such as its capital-expenditure outlook and funding plans. Reitzes estimates that Oracle will need to grow its capex from $35 billion in fiscal 2026 to $95 billion in fiscal 2029 to satisfy its massive backlog. Oracle had already raised $18 billion of debt last month, but Reitzes expects the company to issue more bonds in the coming years, which could cause net margins to dip slightly in the future.
Read on: Why Oracle's 'jumbo' AI-fueled bond deal is so unusual
However, the impact on margins should only be temporary. Oracle expects its earnings per share to grow at a 21% annual rate from fiscal 2025 to 2028 before rising to a 40% annual rate from fiscal 2028 to 2030 as the company ramps up its AI deployments. Oracle anticipates generating earnings of $21 per share by fiscal 2030.
"We pay careful attention to our cash flow, our debt ratings, our debt capacity and the various funding mechanisms that are at our disposal," Doug Kehring, principal financial officer at Oracle, said on Thursday.
The company also announced plans to heavily integrate AI into its database offerings as well as to launch more AI agents. These diverse business segments will be a competitive advantage as the company scales, according to Thill, as they will allow Oracle to vertically and horizontally integrate its solutions.
Oracle is positioned to become an "emerging hyperscaler," Thill wrote.
Not all analysts left Oracle's analyst day convinced of its potential, however. RBC Capital Markets analyst Rishi Jaluria maintained his sector-perform rating and $310 price target, writing on Thursday that "we view the new targets as aspirational and largely reflected in sentiment."
Read: Oracle's stock rises as Wall Street's AI profitability concerns are put to rest
-Christine Ji
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October 17, 2025 09:46 ET (13:46 GMT)
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