Bears Are Losing The Oracle War, According To This Analyst. Should You Buy The Dip In ORCL Stock Here?
Oracle (ORCL) has been under pressure lately, which is why the latest analyst call is important. Analyst Siti Panigrahi at Mizuho wrote that “bearish concerns” surrounding Oracle are easing after the Q3 report while maintaining an “Outperform” rating on the shares but reducing the price target to $320 from $400 due to peer contraction in addition to a change in their fundamental thesis.
The old thesis was straightforward: Oracle’s ambitions in AI were legitimate, but the company would need to use significant resources to support those investments in the data center business. The new argument is that a significant part of that business growth can be supported by paying customers in advance and bringing your own hardware models.
Oracle is one of the largest business software and cloud infrastructure companies in the world, based in Austin, Texas, and has a market capitalization of approximately $444.9 billion. Oracle has already stood out in terms of its position within the AI infrastructure space as Oracle Cloud Infrastructure is growing rapidly and winning major deals in the AI space.
ORCL’s stock price has also seen significant volatility. The stock is currently trading at $155, which is near the lower end of its 52-week range of $118.86 to $345.72. This means the stock is up about 31% from the low end of its 52-week range but down about 55% from the high end of its range.
In terms of valuation, the stock is no longer cheap but it’s also not overpriced from an old-school investor’s perspective. The stock is at 25.72 forward earnings and 7.75 sales. When a company grows its overall revenue by more than 20% and its cloud infrastructure by more than 80%, the stock price no longer seems too expensive from an old-school value investor’s perspective.
The company pays a quarterly dividend of $0.50 per share. The next dividend will be paid on April 24, 2026, to shareholders of record as of April 9, 2026.
Oracle has reported its Q3 2026 earnings, which are undoubtedly impressive. Revenue increased 22% year-over-year (YoY) to $17.2 billion, EPS increased 21% YoY to $1.79 on a non-GAAP basis, and cloud revenue increased 44% YoY to $8.9 billion.
But the real story was the company’s cloud infrastructure revenue, which was up 84% YoY to $4.9 billion—showing that the company’s AI push is actually paying off in terms of revenue growth and not just hype.
The real shocker, however, was the remaining performance obligations. Oracle reported RPO of $553 billion at the end of the quarter, up 325% YoY and up $29 billion sequentially. It’s big, and management deserves a lot of credence when they talk about accelerating revenue over the next few years. Oracle reiterated its revenue guidance of $67 billion in FY2026 and increased its revenue guidance to $90 billion in FY2027. For Q4 FY26, management is targeting revenue growth of 19% to 21% and non-GAAP EPS of $1.96 to $2.00.
Another detail I liked is that the company said that most of the RPO growth in recent times has been driven by large AI contracts, as the equipment needed is pre-funded by the customer paying the contracts in advance or the customers providing the equipment themselves. Simply put, the company may not need to stretch as much as the market thinks it should, at least not as much as the market thinks it should.
Another highlight is that the development of AI code generation capability has helped improve the company’s internal software development efficiency, allowing them to build more SaaS applications at lower costs.
Analyst consensus remains positive, with a consensus rating of “Strong Buy”, and the highest target is $400, the average target is $257.54, and the lowest target is $155.00. The target price of $257.54 represents a 65% upside from the current share price of $155.79.
What this tells us is that the market still sees ORCL as a bit controversial, as some analysts think that the company is very valuable given the AI contracts, while others think that the current share price is more appropriate, as evidenced by the low target of 155 $, which is almost the current share price.
The $320 target Mizuho has, even after the target cut, represents a 105% upside, which is quite remarkable for a company of this type.
At the date of publication, Yiannis Zourmpanos held a position at: ORCL. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
