Oracle shares climbed more than 5% at Wednesday’s open after analysts at Deutsche Bank and HSBC defended the stock. Their comments came after a sharp pullback driven by investor concerns over rising artificial intelligence infrastructure costs and uncertainty surrounding long-term demand.
Deutsche Bank said that despite worries about Oracle’s AI-related commitments and its partnership with OpenAI, the bearish narrative appears overstated. Analyst Brad Zelnick noted that even if Oracle saw no additional revenue from OpenAI, the long-term financial impact would be limited. His team’s projections show only a small deviation from management’s FY30 goals, estimating earnings per share at $17—about $4 lower—and free cash flow at $31 billion, around $10 billion below prior expectations.
The bank also argued that at roughly $200 per share, the market is giving Oracle “little if any credit” for its work with OpenAI. It further addressed concerns around Oracle’s long-term data center lease obligations. While acknowledging the risk, Deutsche Bank believes the company has meaningful flexibility in managing these commitments. In a more conservative scenario, the firm estimates Oracle could still generate about $15 in earnings per share and roughly $26 billion in free cash flow.
HSBC also reiterated its positive view on the stock, maintaining a Buy rating and a $382 price target. The bank pointed to recent confusion among investors after Oracle reported more than $500 billion in remaining performance obligations. HSBC noted that the market has responded with uncertainty due to limited additional detail.
The firm emphasized that Oracle expects its AI infrastructure business to deliver a 30% to 40% non-GAAP gross margin by FY30. It added that combining lower-margin cloud operations with slower-growth software does not signal margin deterioration but simply reflects the business mix. HSBC concluded that Oracle is effectively planning to meet its commitments and sees nearly 92% upside potential.
