Oppenheimer Upgrades Oracle to Outperform as 19th in Daily Trading Volume Amid Valuation Compression and AI-Driven Growth Potential

Market Snapshot

Oracle (ORCL) shares rose 1.20% on February 25, 2026, with a trading volume of $3.95 billion, ranking 19th in total trading activity for the day. The stock’s modest gain followed a year of underperformance, having declined 13% over the past 12 months and 25% in 2026 alone. Despite the recent pullback, the stock now trades at 19 times its projected 12-month earnings, down from a peak multiple of over 40 times in September 2024.

Key Drivers

Oppenheimer analysts upgraded Oracle to “Outperform” from “Perform” on February 25, citing an improved risk-reward profile after the stock’s valuation compression. The firm set a $185 price target, implying a 27% upside from its closing price, and emphasized Oracle’s potential to become a superior earnings per share (EPS) compounder. Analyst Brian Schwartz noted that while the company’s transition to a capital-intensive business model focused on AI infrastructure and cloud data centers may take time to bear fruit, the stock’s multiples—more than halved since September 2024—now reflect a more attractive entry point.

A critical factor in the upgrade was Oracle’s ability to mitigate counterparty risks tied to its partnership with OpenAI. The company’s exposure to OpenAI, which accounted for most of its $300 billion in remaining customer obligations in September 2024, had previously raised concerns about its financial stability. However, Oppenheimer highlighted OpenAI’s accelerating user growth (exceeding 800 million weekly users as of February 2026) and its progress in building an enterprise sales team as signs of improved creditworthiness. Additionally, OpenAI’s anticipated $100 billion funding round has alleviated worries about Oracle’s ability to finance its AI expansion.

Oracle’s recent capital-raising initiatives further bolster its credibility. The company announced plans to raise up to $50 billion in 2026 to expand its cloud infrastructure, addressing concerns about its capacity to meet surging demand from tech clients. Oppenheimer analysts argued that Oracle’s non-financials/ERP applications business, which constitutes a smaller portion of its revenue mix, is relatively insulated from AI-driven disruption. This diversification, combined with its strong balance sheet, positions Oracle to sustain robust growth in its core cloud applications segment.

The upgrade also reflects optimism about Oracle’s long-term EPS trajectory. In a bull case scenario, Oppenheimer projects Oracle’s EPS could triple by fiscal year 2030, driven by a 30% compound annual growth rate, while a base case anticipates a doubling of EPS at a 20% growth rate. These forecasts, even after accounting for conservative assumptions, place Oracle among the top performers in large-cap technology stocks for earnings growth. Analysts noted that demonstrating consistent FTM (Future Twelve Months) revenue and EPS expansion would likely catalyze renewed investor confidence, particularly as software stocks face broader sector-wide pressures from AI-related uncertainties.

While challenges remain, such as margin compression in AI investments and substantial capital expenditures through 2030, Oppenheimer concluded that Oracle’s downside risks are now more contained. The stock’s compressed valuation and improving risk profile have attracted attention from underowned investors, with Schwartz suggesting the market may be underestimating Oracle’s ability to execute its capital-intensive strategy. As the company continues to align its growth with high-demand sectors like cloud infrastructure and AI, the analysts’ upgraded outlook underscores a pivotal shift in investor sentiment toward a stock that has historically been undervalued relative to its earnings potential.