Diverging Views on Oracle’s Path Forward

Oracle US68389X1054

As Oracle approaches January 2026, a stark divide has emerged among market experts regarding the technology giant's prospects. The company's shares, having undergone a 40% correction since September, are currently trading in a narrow band between $192 and $196. This period of consolidation coincides with a rare and pronounced split in analyst sentiment, with forecasts ranging from cautious warnings to predictions of a major rebound.

Beyond the heated artificial intelligence debate, Oracle has recently secured a significant source of stable income. The company renewed its contract to manage TikTok's US operations, a deal that guarantees consistent cloud revenue streams. This commercial anchor provides a measure of financial stability, largely insulated from broader regulatory uncertainties affecting the social media platform.

UBS Trims Target on OpenAI Dependency Concerns

Highlighting the bearish case, UBS significantly lowered its price target for Oracle on Monday, cutting it from $325 to $280. The bank's strategists pointed to what they see as an over-reliance on its key AI partner, OpenAI, as a primary risk. Their analysis flags execution risks should OpenAI fail to meet its ambitious $200 billion revenue target by 2030. Additional concerns include the slowing user growth rate of ChatGPT and mounting competitive pressure from alternatives like Google Gemini.

Despite these reservations, UBS maintains a "Buy" rating. The analysts contend that current credit risks are already reflected in the stock price and that market skepticism surrounding the OpenAI partnership could begin to dissipate in the first half of 2026.

Jefferies Sees a Doubling, Citing Unmatched Capacity

In stark contrast, the investment firm Jefferies reaffirmed a much more bullish $400 price target, implying a potential doubling from current levels. Their researchers interpret the recent share price weakness as a compelling buying opportunity. The core of their argument centers on Oracle's aggressive rollout of new data centers designed to meet exploding demand for AI computing power. Jefferies believes this strategic infrastructure advantage is currently undervalued by the market.

The firm points to Oracle's substantial backlog of $523 billion in committed contracts as evidence supporting its optimistic view. The critical factor, according to Jefferies, will be the speed at which Oracle can convert these commitments into recognized revenue.

Speculation and Denial Stir Volatility

Market volatility was further fueled recently by industry rumors concerning a major infrastructure partnership. Reports suggested that Blue Owl Capital was preparing to withdraw a planned $10 billion investment in a Michigan-based AI data center project involving Oracle. The company swiftly denied these claims, reiterating its commitment to expansion plans. This incident underscores the current investor nervousness and heightened sensitivity to any news related to capital expenditure and financing in the AI sector.

The 2026 Imperative: Execution and Expansion

The central question for Oracle in 2026 revolves around execution. Can the company bring its data center capacity online quickly enough to work through its immense order backlog? The pace of its capacity expansion, exemplified by developments at locations like its Abilene site, will ultimately determine whether the equity can reclaim its former strength or remains in a prolonged phase of consolidation.