TLDR
- Oracle stock surged 11.5% Monday following D.A. Davidson’s upgrade from Hold to Buy rating
- Analyst optimism centers on OpenAI’s strategic refocus and $40 billion cash position to meet partnership obligations
- Oracle’s India cloud operations doubled in two years while TikTok USA stake adds $800 million revenue potential
- Wall Street analysts project 85.8% upside with average price target of $289.62 per share
- Stock remains down 55% from September high of $328.33 despite recent gains
Oracle shares climbed 11.5% on Monday after D.A. Davidson upgraded the stock to Buy from Hold. The firm kept its $180 price target unchanged.
Four-star analyst Gil Luria pointed to improving conditions around Oracle’s AI partnerships. These relationships had previously created uncertainty for investors.
The stock closed at $156, still down 55% from its September record of $328.33. That earlier peak came after Oracle announced over $300 billion in new customer contract obligations.
The excitement faded when details emerged showing a single OpenAI contract accounted for most of that backlog. Concerns grew about the unprofitable AI startup’s ability to pay.
OpenAI Strengthens Financial Position
D.A. Davidson’s upgraded outlook hinges on OpenAI’s improved trajectory. The AI company is refocusing on core frontier models and ChatGPT while cutting less critical projects.
OpenAI currently holds $40 billion in cash. D.A. Davidson estimates the company may raise up to $100 billion in additional funding.
This financial strength positions OpenAI to meet its 2026 commitments to Oracle. The firm believes OpenAI is now more willing to align with partners rather than compete against them.
OpenAI’s previous strategy had pressured stocks across its partner ecosystem. Nvidia, Microsoft, and CoreWeave all experienced downward pressure.
As investor confidence in OpenAI’s long-term outlook improves, connected public companies could see valuation gains. Oracle stands among the primary beneficiaries.
India Expansion and TikTok Revenue
Oracle reported its cloud infrastructure operations in India have doubled over two years. Executives cited strong demand from organizations running mission-critical workloads on Oracle Cloud Infrastructure.
The TikTok USA partnership offers another growth avenue. Oracle acquired a 15% stake in the entity valued at $14 billion by Vice President JD Vance.
D.A. Davidson estimates TikTok USA generated approximately $800 million in Oracle revenue last year. The deal secures TikTok USA as a long-term cloud customer.
Oracle likely obtained its stake at a discounted valuation compared to earlier investor expectations. The partnership could lead to deeper collaboration with ByteDance, TikTok’s parent company.
Oracle carries $130 billion in debt and $248 billion in operating-lease commitments. Luria noted these obligations will burden the company for years.
Wall Street maintains a Strong Buy consensus on Oracle stock. Analysts assigned 26 Buy ratings, eight Holds, and zero Sells over the past three months.
The average analyst price target of $289.62 implies 85.8% upside from current levels. Oracle reports quarterly earnings on March 9.
