Wells Fargo believes Oracle’s value is undervalued due to recent weakness related to concerns over AI trade. The bank reiterated its overweight stance on software stocks. The $280 price target implies an upside of 46% from Friday’s closing price. Oracle stock has fallen 42% from its year-to-date high in September. ORCL YTD Mountain ORCL Year-to-date Wells Fargo analyst Michael Tulin said sentiment is skewed more negative in the short term. For example, the “AI trade” narrative remains challenged, he wrote, given that AI bellwethers face a plethora of competition. Some analysts are increasingly concerned about Oracle’s high exposure to OpenAI, the sustainability of its commitments over the next few years, and execution risks. “Post-launch feedback leans more bearish, with investors questioning ORCL’s ability to deliver on both from a financing and execution perspective, given pre-set targets. All the negatives are priced in, but very little of the positives,” the analysts wrote. However, Turrin noted that recent headlines about Oracle are finally starting to lean in a more positive direction. Specifically, investors appear more confident about OpenAI’s $100 billion raise and Oracle’s deal to run TikTok’s U.S. operations, which is expected to close on January 22nd. “More generally, ORCL bulls 1) believe the sharp decline is too much as the stock has returned to pre-OpenAI levels, 2) see the potential for significant market share gains in cloud IaaS, and 3) believe AI is still in the early stages,” he said. Turrin added that OpenAI could account for 25% to 30% of Oracle’s revenue between 2028 and 2030.
