TLDR
- Oracle stock jumped 11.5% after D.A. Davidson upgraded shares from Hold to Buy with a $180 price target
- The upgrade stems from improved outlook on Oracle’s AI partnerships, particularly with OpenAI, which is refocusing on core models
- OpenAI has $40 billion in cash and may raise up to $100 billion more, strengthening its ability to meet Oracle commitments
- Oracle’s cloud infrastructure operations in India have doubled in the past two years on strong demand
- The TikTok USA partnership, where Oracle holds a 15% stake, could add roughly $800 million in annual revenue
Oracle stock climbed 11.5% on Monday after D.A. Davidson upgraded the tech company from Hold to Buy. The investment firm maintained its $180 price target despite the upgrade.
Analyst Gil Luria cited improving conditions around Oracle’s AI partnerships as the primary driver. These partnerships had weighed on the stock in recent months.
The upgrade comes as Oracle trades at $156, down from its September record high of $328.33. That 55% decline followed revelations about a massive contract with unprofitable OpenAI.
OpenAI Refocuses on Core Business
D.A. Davidson’s optimism centers on OpenAI’s strategic shift. The AI startup is now focusing on its core frontier models and ChatGPT while scaling back less important projects.
This refocusing should help OpenAI meet its 2026 commitments to partners like Oracle. The company already has $40 billion in cash on hand and may raise up to $100 billion in new funding.
OpenAI’s previous behavior had negatively impacted stocks across its ecosystem. Companies like Nvidia, Microsoft, and CoreWeave all felt the pressure.
The investment firm now believes OpenAI appears more willing to align with major partners rather than compete directly. This shift could restore investor confidence in the AI startup’s long-term outlook.
Public companies connected to OpenAI may see meaningful valuation upside as confidence returns. Oracle stands to benefit from this improved dynamic.
Oracle announced its cloud infrastructure operations in India have doubled over the past two years. Company executives pointed to strong demand from organizations running mission-critical workloads on Oracle Cloud Infrastructure.
TikTok Partnership Adds Revenue Stream
The TikTok USA deal presents another growth opportunity for Oracle. The company holds a 15% stake in the new entity valued at $14 billion.
D.A. Davidson estimates TikTok USA generated roughly $800 million in revenue for Oracle last year. The partnership locks in TikTok USA as a long-term cloud customer.
Oracle likely acquired its stake at a discounted valuation. Vice President JD Vance stated the U.S. version would be valued at $14 billion, below investor expectations.
The deal opens doors for deeper partnerships with ByteDance, TikTok’s parent company. This could expand Oracle’s cloud business beyond the current arrangement.
Oracle faces challenges including $130 billion in debt and $248 billion in operating-lease commitments. These obligations will burden the company for years.
Wall Street analysts maintain a Strong Buy consensus rating on Oracle stock. The rating includes 26 Buy recommendations, eight Holds, and zero Sells.
The average price target stands at $289.62 per share, implying 85.8% upside from current levels. Oracle reports earnings on March 9.
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