Oracle Shares Gain as Oppenheimer Highlights Undervalued Potential

Oracle stock rises 4% after Oppenheimer upgrade to Outperform with a $185 target, citing strong cloud revenue, surging RPO, and a compelling valuation entry point.

Oracle's stock advanced approximately 4% on Wednesday following a significant upgrade from investment bank Oppenheimer. The firm raised its rating on the software giant to "Outperform" and established a price target of $185 per share. This bullish call arrives at a pivotal moment for the company, which has seen its market valuation decline by roughly a quarter since the start of the year, a drop that stands in stark contrast to its robust operational performance.

Operational Strength Amid Market Skepticism

The recent sell-off appears disconnected from the company's fundamental results. For its second fiscal quarter of 2026, Oracle reported a 14% increase in revenue, reaching $16.1 billion. Its cloud business was a standout, surging 34% to $8.0 billion, with cloud infrastructure revenue alone jumping 68% to $4.1 billion. Adjusted earnings per share climbed 54% to $2.26, surpassing market expectations.

A particularly striking indicator of future revenue is the company's Remaining Performance Obligations (RPO), which skyrocketed by 438% to $523 billion. This figure represents contracted revenue that has yet to be recognized, signaling a massive pipeline of future sales.

The Analyst's Rationale for an Upgrade

Oppenheimer analyst Brian Schwartz acknowledged that his upgrade might be considered early. However, he argued that key valuation metrics have more than halved since September, presenting a compelling entry point. Schwartz identified several potential catalysts for the stock, including projected earnings growth, reduced financing risks, and a relatively lower susceptibility to disruption from artificial intelligence trends. He also noted that Oracle shares are currently under-owned by institutional investors.

In his base-case scenario, Schwartz projects that Oracle's earnings per share could double by fiscal year 2030. A more optimistic outlook suggests the potential for EPS to triple within the same timeframe.

Understanding the Recent Pressure

The stock's recent weakness stems from multiple factors. On February 1, Oracle announced plans to raise between $45 and $50 billion through debt and equity offerings by 2026. This substantial capital is intended to fund the expansion of its cloud infrastructure, necessary to fulfill contractual commitments to major technology partners including AMD, Meta, Nvidia, OpenAI, TikTok, and xAI.

The sheer scale of this proposed fundraising has unsettled some investors. Additional concerns have arisen from several securities lawsuits related to Oracle's AI investments and its Stargate initiative. Furthermore, insider stock sales by senior executives during January and February have contributed to the negative sentiment.

Upcoming Quarterly Report as a Catalyst

All eyes are now on Oracle's upcoming earnings release on March 9, which will cover its third fiscal quarter. Analysts are forecasting earnings per share of $1.56. This report is viewed as critical for demonstrating whether the company's multibillion-dollar investments in AI infrastructure are translating into sustainable revenue growth. Despite recent volatility, the average analyst price target for Oracle sits near $287—more than double the stock's recent price of 125.26 euros.