Citi says to buy the dip in Oracle, sees stock soaring nearly 40% from here

Citi analyst Tyler Radke raised Oracle's price target to $415 from $395, reiterating a buy rating and projecting nearly 40% upside, despite the stock's recent 10% pullback. Radke views the decline as a buying opportunity, citing robust demand for AI infrastructure within Oracle Cloud Infrastructure (OCI) and anticipating management clarity on CapEx and long-term profitability for AI projects. He expects substantial upward revisions to Oracle's estimates through fiscal year 2028, which could offset operating margin pressure and drive earnings growth, with the upcoming AI World event serving as an additional catalyst.

Analysis

Citi analyst Tyler Radke has raised Oracle's (ORCL) price target to $415 per share from $395, maintaining a buy rating and projecting nearly 40% upside. This revised outlook follows a recent 10% decline in ORCL shares, attributed to broader concerns regarding the artificial intelligence trade and profitability. The overall sentiment surrounding this development is strongly positive, with an optimistic tone.

Radke views this pullback as a buying opportunity, citing robust and growing demand for AI infrastructure within Oracle Cloud Infrastructure (OCI). He anticipates management will provide crucial clarity on CapEx, financing needs, and long-term profitability related to these expanding AI projects.

The analyst also points to significant bookings strength in OCI, driven by escalating AI infrastructure demand from leading customers. He expects substantial potential for upward revisions in Oracle's estimates through fiscal year 2028, which could mitigate operating margin pressures and bolster earnings growth. The upcoming AI World event is identified as another potential catalyst.

Key Decisions for Investors

• Investors should evaluate the recent 10% pullback in ORCL shares as a potential buying opportunity, aligning with Citi's reiterated buy rating and significant price target increase.
• Monitor Oracle's upcoming AI World event for new announcements or management commentary that could provide further clarity on AI strategy, CapEx, and long-term profitability, potentially serving as a stock catalyst.
• Consider the analyst's expectation of substantial upward revisions to Oracle's estimates through fiscal year 2028 as a key factor for long-term growth potential, particularly in balancing operating margin pressures.