Bank of America Says Oracle Stock Can Gain More Than 30% from Here. Why?

On March 24, Tal Liani of Bank of America Securities (BofA) assigned a price target of $200 to Oracle's (ORCL) stock, reinstating coverage with a “Buy” rating. That'd put it about 35% higher than its current price. He cited large revenue potential from AI demand as the primary reason for his bullish stance. Oracle is part of a consortium of companies, including OpenAI and SoftBank (SFTBY), that will develop America’s next-generation AI infrastructure as part of Project Stargate.

The company is a beneficiary of the massive AI buildout, and its stock price has fallen low enough for it to be worth investing in. But there’s the other side of the picture, which BofA has also pointed out in its note to investors. One issue is the timing of the company’s backlog. While the backlog is worth $553 billion, more than half of it is beyond the three-year mark. Moreover, a big chunk of this backlog is from OpenAI, which itself is part of Project Stargate.

It can be argued that both of the above factors are already priced into the stock. The dependence on OpenAI saw another big technology player, Microsoft (MSFT), losing share value once it became clear how much of its backlog was from Sam Altman's company. The Street has now absorbed the shock of those revelations, and BofA makes a fair point of investing now for both short-term and long-term returns.

About Oracle Stock

Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its clients include large enterprises, governments, and companies that require AI and cloud computing services. It offers database management and cloud infrastructure to the clients, among other things. It was founded in 1977 and is headquartered in Austin, Texas.

The company’s stock traded at a 52-week high of over $345 just six months ago. Since then, it has declined by roughly 57%! As a result, it is precisely where it was one year ago, so investors who simply put their money into the S&P 500 ($SPX) would have been much better off, enjoying the 13.6% gains minus all the stress of the AI roller coaster.

Those who have watched ORCL stock’s decline from the sidelines are now looking at a favorable valuation for a fresh entry. The stock is trading at a forward price-to-earnings ratio of 26.4x, sandwiched between the S&P 500’s forward PE of 21.1x and its own five-year average of 31.58x. On a price-to-cash-flow basis, the stock trades at a 14.5% discount to its five-year average. 

These are attractive entry points for any investor betting on artificial intelligence. What’s more, even income investors can take exposure to AI through Oracle thanks to its 1.3% dividend yield, which is now higher than its five-year average dividend yield of 1.28%.

Oracle Comfortably Beats Wall Street Expectations

Oracle announced its quarterly results on March 10, comfortably beating Wall Street estimates. The revenue of $17.19 billion was higher than the estimated $16.91 billion, and the EPS of $1.79 vs. the expected $1.70 was undoubtedly what investors were looking for. The company grew its revenue by 22% YoY during the quarter.  

The third quarter was the first in more than 15 years that both the organic total revenue and the organic non-GAAP EPS grew by more than 20% in USD terms. Management is confident of beating its own guidance in 2026 and strives to keep raising its 2027 guidance. However, it must be added that AI infrastructure demand far exceeds the supply, which is why the company has a Remaining Performance Obligation (RPO) of $553 billion. The firm is under constant pressure to expand capacity and coordinate with customers to meet their demand on time.

What Are Analysts Saying About ORCL Stock?

Beyond Bank of America Securities’ $200 price target, analysts are even more bullish on ORCL stock, with Bernstein assigning a $319 price target and DBS going with a $360 price target on the stock. As per estimates from 31 Wall Street analysts, the highest price target on the stock is $400, representing 170% upside from current levels. The average price target of $256.42 can bring investors 73% gains over the next year.