Jefferies' $400 Oracle (ORCL) Target Reflects Confidence in AI Infrastructure

Oracle Corporation (NYSE:ORCL) is among the best software infrastructure stocks to buy according to hedge funds. On January 5, Jefferies reaffirmed its Buy rating and $400 price target on the stock and named it one of its top picks, citing multiple factors, including its long-term positioning in the AI infrastructure space.

While there have been concerns about the debt Oracle Corporation (NYSE:ORCL) has been piling up to fund its AI-related expansion plans, the analyst believes that the company’s investment case rests on accelerating its data center buildout to meet surging AI compute demand. He also believes that it is critical for the company to execute this strategy to convert its more than $523 billion backlog into revenue in a timely manner. If Oracle delivers on its strategy as planned, it could solidify its position as a core infrastructure provider for AI workloads across hybrid and multi-cloud environments.

Jefferies also views Oracle Corporation’s (NYSE:ORCL) valuation as compelling after the substantial pullback in Oracle shares over the past three months. The firm believes Oracle should command a higher valuation and derived a $400 price target based on a 19x EV/FY 2030 EPS estimate of $21. With Oracle’s current valuation multiple of 16x EV/CY27 EBIT, the firm sees “far more upside than downside”.

On the same day as Jefferies’ rating action, UBS analysts also trimmed their price target on Oracle from $325 to $280. They, however, maintained their Buy rating, as they believe the pullback in share price has already factored in many concerns, including financing and credit risks.

Oracle Corporation (NYSE:ORCL) offers an extensive suite of database and cloud computing software and hardware. The Company offers databases and relational servers, application development and decision support tools, as well as enterprise business applications.

While we acknowledge the potential of ORCL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.