Tech giant Oracle (ORCL) provided some aggressive long-term goals at its analyst day. Indeed, the company now projects $225 billion in revenue by Fiscal Year 2030, which equates to a 31% compound annual growth rate over the next five years. Interestingly, Piper Sandler analysts Hannah Rudoff and J.R. Herrera stated that this was a sharp increase from their prior estimate of about 20% growth and noted that the biggest catalyst is Oracle Cloud Infrastructure (OCI).
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More specifically, OCI is now expected to reach $166 billion in revenue by 2030, up from a previous forecast of $144 billion. In their investor note, the analysts described the projections as “impressive,” and they responded by reiterating a Buy rating on the stock. They also raised their price target from $330 to $380. However, Oracle’s share price sank despite the upbeat outlook.
Separately, during the event, Oracle co-CEO Clay Magouyrk provided some details on the gross margins of the AI data centers. He described a hypothetical six-year deal for one gigawatt of GPU accelerator capacity, worth $60 billion in total contract value. Magouyrk broke down the costs into two main categories: around 35% covers land, data centers, power generation, and staff, while the remaining 65% accounts for compute, networking, and storage hardware. Nonetheless, when factoring all these costs, Oracle estimates a 35% gross margin.
Is ORCL Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 27 Buys, nine Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $352.85 per share implies 21.3% upside potential.
