Melius Stays Bullish on Oracle (ORCL) as AI Cloud Growth Accelerates

Oracle Corporation (NYSE:ORCL) is one of the Trending AI Stocks on Wall Street. On September 10, Melius analyst Ben Reitzes raised the price target on the stock to $370.00 (from $270.00) while maintaining a Buy rating.

The firm anticipates accelerating long-term revenue growth for Oracle, largely driven by a surge in AI inferencing capabilities. It also expanded Oracle’s valuation multiple to reflect higher growth.

At the same time, analysts have noted that free cash flow has turned negative and will likely hurt for a while due to heavy capex.

“Bottom Line: We raise our target and reiterate our Buy rating for ORCL 37% to $370 from $270 reflecting accelerating revenue growth long-term, helped by a surge in inferencing. We also expand our multiple 4 turns to reflect the higher growth. This growth comes at a price as Oracle’s free cash flow has gone negative and should be hurting for a while to fund the growth – but it doesn’t seem to be an issue for now. Capex commentary bodes very well for our other Buy-rated names – Nvidia, Broadcom, AMD and especially Arista Networks, who all have exposure to Oracle and Stargate, and the inferencing boom. AI Cloud trends overall should benefit Microsoft (Buy), Google (Hold) and CoreWeave (Hold).”

Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.

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Disclosure: None.