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Austin, Texas-based Oracle Corporation (ORCL) offers products and services that address enterprise information technology environments. Valued at a market cap of $469.6 billion, the company offers cloud solutions and services that can be used to build and manage various cloud deployment models.
Shares of this computer software giant have outpaced the broader market over the past 52 weeks. Oracle has rallied 47.5% over this time frame, while the broader S&P 500 Index ($SPX) has gained 22.6%. Moreover, on a YTD basis, the stock is up 3%, compared to SPX’s 2.7% rise.
Narrowing the focus, ORCL’s outperformance looks even more pronounced when compared to the Technology Select Sector SPDR Fund’s (XLK) 15.5% return over the past 52 weeks and marginal gain on a YTD basis.
Oracle’s outperformance over the past year can be primarily attributed to the growing demand for the company's cloud infrastructure for handling artificial intelligence (AI) workloads and the growing usage of its cloud-based database services.
However, Oracle's stock price dropped sharply by 13.8% on Jan. 27 after the introduction of the latest version of the Chinese AI model, DeepSeek. This news caused a ripple effect, negatively impacting stock prices across the entire AI sector, including companies like Oracle that provide crucial data center infrastructure. The stock plummeted because some investors believed that DeepSeek would drastically reduce the need for the data centers Oracle and others operate.
Nonetheless, ORCL regained 3.6% on Jan. 28 after analysts at Jefferies noted that DeepSeek's efficiency improvements would also improve the return on interest from artificial intelligence (AI) systems, restoring investor confidence in the stock.
For the current fiscal year, ending in May, analysts expect Oracle’s EPS to grow 8.2% year over year to $5. The company’s earnings surprise history is mixed. It topped the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 33 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 21 “Strong Buy,” 11 “Hold,” and one “Strong Sell” rating.
This configuration is more bullish than three months ago, with 19 analysts suggesting a “Strong Buy” rating.
On Dec. 10, BMO Capital Markets maintained a “Market Perform” rating on Oracle and raised its price target to $205, which indicates a 19.4% potential upside from the current levels.
The mean price target of $195.03 represents a modest 13.6% upside from ORCL’s current price levels, while the Street-high price target of $227 suggests an upside potential of 32.2%.
