Oracle Expands Cloud Services in Indonesia with New Data Center.

Oracle is set to launch its first cloud services center in Indonesia in collaboration with DayOne Data Centers Singapore Pte. The center will be located at Nongsa Digital Park on Batam Island and will serve as the exclusive tenant for facilities with a minimum capacity of 120 megawatts. This move marks a significant expansion for Oracle's cloud infrastructure in Southeast Asia. Analysts have set an average target price of $228.21 for Oracle, with a high estimate of $275.00 and a low estimate of $175.00. The average target implies a downside of 1.97% from the current price.

Oracle Corporation (ORCL) is set to launch its first cloud services center in Indonesia, marking a significant expansion of its cloud infrastructure in Southeast Asia. The company will collaborate with DayOne Data Centers Singapore Pte to establish the center at Nongsa Digital Park on Batam Island. Oracle will serve as the exclusive tenant on plots capable of accommodating facilities with a minimum capacity of 120 megawatts [1].

The move is part of Oracle's broader strategy to strengthen its presence in Asia, following its recent investments in Singapore and Malaysia. This strategic expansion is expected to enhance Oracle's cloud services offerings in the region, positioning it to capitalize on the growing demand for cloud services in Southeast Asia [2].

Analysts have set an average target price of $228.21 for Oracle, with a high estimate of $275.00 and a low estimate of $175.00. The average target implies a downside of 1.97% from the current price of $232.79 [1]. This forecast reflects a cautious optimism among investors about Oracle's growth prospects in the cloud services sector.

GuruFocus estimates suggest that Oracle's GF Value might be significantly overvalued at current prices, with a projected GF Value of $152.23 for the next year, implying a potential downside of 34.6% from the current price of $232.785 [1]. This valuation metric is calculated based on historical trading multiples and anticipated future business performance.

The establishment of the cloud services center in Indonesia is expected to further bolster Oracle's cloud revenue, which has been growing at a robust pace. In the latest quarter, Oracle reported a 27% increase in cloud revenue (SaaS + IaaS) to $6.7 billion, highlighting the company's strong performance in the cloud transition [1]. Additionally, Oracle's infrastructure business, OCI, is experiencing exceptional demand, with revenue expected to grow over 70% in the current year [1].

However, Oracle faces several challenges that could impact its financial performance. The company's free cash flow was negative $400 million for the fiscal year, with significant CapEx investments impacting cash flow. Moreover, Oracle is facing supply constraints, unable to meet the high demand for its cloud services, leading to scheduling customers into the future [1]. The company's CapEx is expected to increase further to over $25 billion in FY26, which may strain financial resources [1].

Despite these challenges, Oracle's strategic expansion in Indonesia reflects its long-term growth ambitions. Investors should carefully consider the varying price targets and the GF Value's implications on Oracle's current valuation status as the company continues to invest in its cloud infrastructure [2].

References:
[1] https://www.gurufocus.com/news/2972483/oracle-orcl-to-launch-first-cloud-services-center-in-indonesia-orcl-stock-news
[2] https://www.gurufocus.com/news/2968564/oracle-orcl-expands-cloud-presence-with-new-center-in-indonesia