Shares of Oracle (ORCL) jumped about 10% premarket on Wednesday after fiscal third-quarter results and outlook beat estimates and drew positive reactions from analysts.
J.P. Morgan upgraded Oracle’s rating to Overweight from Neutral, noting that the severe selloff improves risk-reward against a backdrop of thick investor pessimism.
However, the firm lowered the price target on the stock to $210 from $230.
Analysts led by Mark Murphy said that they upgraded the shares due to several reasons. They said the material selloff in Oracle’s shares, down 55% since mid-September (versus +1% for the S&P 500 and 0% for the NASDAQ), de-risks valuation.
Murphy and his team added that the corresponding shift in investor expectations from blind faith to widespread pessimism in the attainability of fiscal year 2030 targets, OpenAI ramp, and debt-raising capability, sets a lower expectations bar.
In addition, the analysts said that a successful $25B debt raise last month with no apparent need for incremental bond issuance in 2026 may ease some potentially overblown Credit Default Swap, or CDS, tracking and related debt rating concerns.
Murphy and his team noted that the upgrade was also based on incremental proof points supporting the ability to accelerate top line rapidly and converge on growth territory while still growing operating income in the double-digits.
However, the analysts did point to some conditions. They said their upgrade was not predicated on the achievability of long-term financial targets; the margin structure of the business does get complicated with material gross margin percentage compression offset by tremendous operating expenditure discipline; and OpenAI (OPENAI) still poses very material Remaining Performance Obligation, or RPO, customer concentration amid a dynamic landscape.
“Coming into Oracle’s FQ3 (February) earnings results, we explicitly stated ‘Don’t Underestimate Oracle’s Resolve to Weather the Current Storm and Show Acceleration’ and emphasized the potential for USD revenue growth to crest above 20% in Q3. Although Q4 guidance came in approximately one percentage point below consensus on total revenue in CC terms, the underlying execution feels net-positive, underpinned by continued OCI momentum and a broadening of the growth algorithm across the business,” said Murphy and his team.
RBC Capital Markets maintained its Sector Perform rating and $160 price target on the stock.
Analysts led by Rishi Jaluria said that Oracle delivered a “solid” fiscal third quarter, as total revenue accelerated to 22% year-over-year while cloud revenue accelerated 44%, driven by 81% constant currency growth in Oracle Cloud Infrastructure, or OCI, and fiscal year 2027 revenue was raised to $90B.
“With $29B in contracts signed for BOYH/upfront [bring-your-own-hardware/upfront] payment, Oracle is demonstrating its ability to increase capacity without the need for additional financing, which should alleviate some investor concerns. From here, sustained share appreciation likely depends on demonstrating disciplined funding, margin durability, and a visible path to FCF [free cash flow] recovery,” said Jaluria and his team.
Jefferies kept its Buy rating and $320 price target on Oracle’s stock.
“ORCL delivered a strong F3Q, with broad-based upside and the clearest proof yet that its AI infra strategy is scaling into durable backlog and rev. [revenue],” said analyst Brent Thill and his team. “. RPO surged to $553B (+$29B q/q), driven by large, capital-efficient AI contracts. We think risk/reward remains skewed positive with ORCL now compounding total rev & EPS >20%.”
Related stocks: Microsoft (MSFT), Amazon (AMZN), and Salesforce (CRM) were largely flat, while SAP (SAP) dipped about 2% premarket on Wednesday.