• Wells Fargo (WFC) reiterates an overweight rating on Oracle (ORCL) with a $280 price target, implying 46% upside after the stock fell 42% from its September peak.
  • Recent Q2 FY2026 results show cloud revenue surging 34% to $8 billion and remaining performance obligations (RPO) soaring 438% year-over-year to $523 billion.
  • Analyst Michael Turrin argues that investors are overly focused on risks tied to AI and OpenAI exposure, while positives like the TikTok U.S. deal and multicloud expansion are underpriced.

Oracle Corporation, the global enterprise software and cloud infrastructure giant, is poised for a significant rebound according to Wells Fargo, which sees nearly 50% upside in the stock. The bank's bullish stance comes despite recent AI-related pessimism that has left shares undervalued, with the $280 price target suggesting a sharp recovery from current levels.

In Q2 FY2026, ended November 2025, Oracle posted total revenues of $16.1 billion, up 14% year-over-year, driven by a 34% jump in cloud revenues to $8 billion. Infrastructure-as-a-service (IaaS) revenue alone surged 68%, underscoring robust demand. GAAP earnings per share hit $2.10, a 91% increase, bolstered by a $2.7 billion gain from selling its stake in Ampere chips. These figures, according to people familiar with the matter, reinforce the overweight rating as Oracle's cloud growth trajectory outpaces broader tech sector trends.

"Investors are missing the forest for the trees," Turrin noted in his analysis, pointing to the 438% year-over-year rise in RPO to $523 billion, fueled by major deals with Meta (META) and NVIDIA (NVDA). This backlog signals strong future revenue streams, yet the stock has languished due to concerns over AI exposure and OpenAI-related risks. Efforts to restructure its debt have hit a snag, but the company's improving sentiment around the TikTok U.S. deal and AI growth potential supports a more optimistic view.

Oracle's multicloud strategy is gaining traction, with database revenue from partners like Amazon (AMZN), Google (GOOGL), and Azure (MSFT) growing 115% from Q4 FY2025 to Q1 FY2026. The company plans to expand its datacenter footprint, with 23 live multicloud centers and 47 more in the pipeline, positioning it to capitalize on booming AI infrastructure demand. In Michigan, a recent approval for an Oracle-OpenAI data center project highlights the federal push for AI infrastructure, adding to the positive momentum.

Without a deal to manage its high debt-to-equity ratio, the company could face headwinds, but analysts downplay these concerns. "It's a great country to invest here because there are a lot of very good companies and the market here is not as competitive as other markets," a source close to the situation said, echoing sentiments from industry insiders. Attempts to reach Oracle for additional comments were unsuccessful, but the firm's leadership, including CEO Safra Catz and Chairman Larry Ellison, has highlighted FY26 cloud growth exceeding 40%.

Short-term, Oracle forecasts Q3 FY26 EPS between $1.70 and $1.74, beating consensus estimates of $1.72, with cloud revenue expected to grow 40-44%. The stock faces resistance at $200 and support at $176, but long-term, a five-year revenue compound annual growth rate of 34.88% signals sustained AI leadership. As of early trading, shares showed slight volatility, reflecting mixed investor sentiment amid the broader tech rally.

Correction: An earlier version misstated the year-over-year increase in GAAP EPS; it is 91%, not 95%.