Tech giant Oracle (ORCL) has been gaining attention in 2025 due to its push into artificial intelligence and its recent success in landing big cloud contracts. Indeed, the company has shifted from just selling databases to becoming a key player in the cloud and AI space, which has led to new growth opportunities. However, even with that momentum, Oracle faces some risks that investors should be aware of.
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Catalysts that May Push the Stock Higher
One of the biggest potential catalysts for Oracle is its reported $300 billion partnership with OpenAI. Under this deal, Oracle will help build about 4.5 gigawatts of data center capacity as part of the “Stargate” AI infrastructure project. If successful, this would make Oracle a central provider of AI computing power in the years ahead.
Beyond the OpenAI deal, Oracle’s business pipeline is also exploding. In fact, the company’s backlog—also known as Remaining Performance Obligations (RPO)—grew by 359% year-over-year to $455 billion. This shows that customers are locking in long-term contracts for Oracle’s cloud and AI services, which can help support steady revenue growth moving forward.
Oracle is also expanding through multicloud partnerships like Database@Azure, which lets Microsoft Azure users tap into Oracle’s technology. In addition, it’s building out its infrastructure with more GPUs to handle complex AI tasks, which could boost profits if usage grows and Oracle can charge more for its services.
Risks to Watch Out For
Despite the strong momentum, Oracle’s future depends heavily on the success of the OpenAI deal. If OpenAI delays payments or renegotiates the terms, Oracle could lose a big chunk of its expected growth. Additionally, credit agencies like Moody’s have recently warned that Oracle may need to borrow up to $100 billion to build out the data centers promised in the deal.
There are also cybersecurity concerns. Indeed, Oracle’s healthcare and enterprise software systems have reportedly been targeted by hackers, which has put sensitive client data at risk. Lastly, the stock’s valuation is another risk. Oracle trades at 40 times forward earnings, its highest valuation since the dot-com era. This is higher than the Nasdaq 100 average of 27 times. If AI excitement cools down or growth slows, investors may be less willing to pay a premium for Oracle’s shares, causing the stock to fall.
Is ORCL Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 25 Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $341.37 per share implies 19.3% upside potential.
