Oracle (ORCL) stock has declined 29% so far this year amid fears that artificial intelligence (AI) will disrupt traditional software vendors and concerns about the company’s high debt levels to fund its AI buildout. Meanwhile, Oracle is seeing a strong surge in its cloud revenue amid the ongoing AI wave, as reflected in its upbeat Q3 FY26 results. On Monday, top Bernstein analyst Mark Moerdler reiterated a Buy rating on ORCL stock with a price target of $319, saying “The story is better than we thought, with better upside potential.”
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Top Analyst Is Confident About Oracle’s Growth Potential
Moerdler stated that Oracle’s strong Q3 results and outlook helped address some investor concerns. That said, the analyst noted that worries about the company’s massive data center buildout and its customer concentration risk remain. Amid growing concerns about AI disrupting conventional software companies, Moerdler views Oracle as “one of the go-to investment names,” given its AI data center business and its core database segment, which is also well-positioned to benefit from AI.
While investors are concerned about Oracle’s elevated AI spending, Moerdler expects the company’s big bet on AI to deliver the desired results. Furthermore, the 5-star analyst thinks that Oracle will need much less additional cash than previously expected. Specifically, Moerdler estimates that Oracle may need only $15 billion to $20 billion in additional capital by Fiscal 2028 to complete its contracted buildout.
In fact, Moerdler expects Oracle’s free cash flow to significantly recover once the initial “accelerated” buildout phase ends around Fiscal 2029. The analyst expects Oracle’s free cash flow to turn positive by Fiscal 2030 and reach $212 billion annually by Fiscal 2035.
The top-rated analyst said that the company’s plan to raise up to $50 billion in debt and equity will provide the cash needed to fund the business through 2029. Also, Moerdler highlighted that OpenAI’s recent $110 billion funding round reassures investors about the AI startup’s ability to pay Oracle for its compute under their deal. Overall, the analyst believes the upside potential for Oracle is much greater than the downside risk.
Is Oracle Stock a Strong Buy?
Overall, Wall Street scores a Strong Buy consensus rating based on 27 Buys and four Hold recommendations. The average ORCL stock price target of $245.11 indicates 77% upside potential from current levels.
