(Bloomberg) — To Wall Street, Oracle Corp. is a screaming buy. To many investors, however, the company’s relationship with OpenAI, its sizable debt load and the durability of its software business have made owning the stock a risk.
Most Read from Bloomberg
Oracle shares were on a six-session losing streak in which they’ve lost 14% through Thursday’s close, their worst stretch in months. Despite an April rally, the stock is down nearly 50% since hitting a high in September.
The latest move is centered around OpenAI, which is facing questions about its ability to meet the hundreds of billions of dollars it’s committed to spend on developing artificial intelligence technology. The ChatGPT owner missed its latest sales and user targets, according to a Tuesday report, and Oracle shares sank 4.1% in that session.
But Wall Street pros argue that the market is wrongly focused on the noise coming from OpenAI and failing to recognize Oracle’s growth potential as Big Tech builds out the infrastructure to power AI.
“We don’t see meaningful negative impact or any negative impact from the OpenAI news. We think it’s kind of overdone,” said Michael Monaghan, portfolio manager at Founder ETFs, which owns Oracle shares. What’s not understood by some investors is “what a major disruptor they’ll be in AI infrastructure. We think that they’re attacking the boring but highly profitable layer of the AI stack.”
The stock is on track to snap the losing streak Friday, jumping as much as 5.5% in early trading.
Of the 51 Wall Street analysts tracked by Bloomberg who follow Oracle, 41 have buy ratings on the stock and only one rates it a sell. The consensus price target for the shares is about $240. Based on its Thursday closing price of around $161, that implies a 43% rise over the next 12 months, one of the highest projected upsides among Oracle’s large-cap tech peers.
However, questions about Oracle’s growth remain. The stock hit its previous record on the strength of an aggressive outlook for its cloud business, which was partially based on a deal with OpenAI said to be worth $300 billion over five years. The ensuing selloff was spurred by creeping doubts about OpenAI’s circular financing agreements — where it’s a customer of the companies it’s being funded by — and the potential fallout if it fails to meet its multitude of financial commitments.
Capacity constraints are an emerging issue, with companies such as Alphabet Inc., Microsoft Corp., Meta Platforms Inc. and Amazon.com Inc. signaling on earnings calls this week that demand for AI-related components is outstripping supply. This is why hyperscalers are spending so much on AI infrastructure, including chips and data centers. If, however, the big spenders like OpenAI suddenly turn off the spigot, that equation could reverse, leaving Oracle without a major client for its products.
Oracle also has been caught up in investors’ worries about AI disrupting the software sector, since it sells enterprise software in addition to data management and cloud infrastructure technology. And its rising debt levels to fund investments in AI infrastructure have also given investors pause. In March, the cost of protecting the company’s debt against default for five years rose to the highest closing level on record, taking out the previous record hit in 2008.
Bulls see these fears as overblown, however, especially with the company in the early years of what’s expected to be a massive long-term buildout to power AI.
“The worries over the debt were ridiculous in our view,” said Nancy Tengler, chief investment officer at Laffer Tengler Investments, which holds Oracle shares. “This is a company that has always had a tremendous amount of debt on their balance sheet. The debt-to-equity ratio has actually gone down materially year-over-year.”
The tech infrastructure that Oracle is building is fungible and proven to be in high demand, Tengler said. For example, when Oracle and OpenAI scrapped plans to expand an AI data center in Abilene, Texas, in March, Meta Platforms Inc. quickly stepped in to consider leasing the site with Nvidia Corp. helping to facilitate the discussions.
“There is plenty of other demand out there to whom Oracle could lease that capacity or provide that capacity,” said JoAnne Feeney, a portfolio manager at Advisors Capital Management. “So I think there’s some mistaken responses here to sort of sell off all of these guys.”
While the recent downturn in Oracle shares has compressed the company’s market valuation, they’re still relatively expensive by historical standards. The stock currently trades at about 21 times forward earnings, above its 10-year average around 18 times.
But Oracle shareholders are more focused on the company’s long-term potential as the AI trend continues to grow. In particular, they believe in the company’s leadership. Chairman Larry Ellison has been “the ultimate founder, who sees a vision and executes it. He’s been doing it for 40 years. We think he’ll continue to do it,” Founder ETFs’ Monaghan said. To Tengler, he’s one of Silicon Valley’s fiercest competitors.
“Our price target is double the current stock price,” said Monaghan, who sees catalysts over the next three to four quarters unlocking that value. “We think it’s an incredibly attractive entry point.”
Tech Chart of the Day
Alphabet Inc. added a historic amount to its market capitalization on Thursday, following blowout quarterly earnings that sent the stock skyrocketing. The shares rose 10% to $384.80, adding $421 billion to its market valuation, the second-biggest one-day jump in market cap add for any stock ever, according to data compiled by Bloomberg.
Top Tech Stories
Apple Inc. delivered a surprisingly strong revenue forecast for the third quarter, even as it warned that memory-chip costs will increase and that shortages of Mac computers will persist for “several months.”
OpenAI Chief Financial Officer Sarah Friar, rebutting concerns about missing internal targets, said the company is meeting objectives and sees “a vertical wall of demand” for its products.
Rivian Automotive Inc. shares tumbled as it offered investors few fresh details about demand for its new R2 electric SUV, a model that’s seen as critical to the electric-vehicle maker’s future.
Elon Musk’s first compensation figure after Tesla Inc. shareholders approved his moonshot pay package is in, and it’s a doozy: $158 billion.
Tesla Inc. generated more than half a billion dollars in revenue last year from selling products to two of Elon Musk’s other companies, the carmaker disclosed in an amended annual filing.
Earnings Due Friday
–With assistance from Subrat Patnaik.
(Updates stock moves throughout, adds today’s trading)
Most Read from Bloomberg Businessweek
©2026 Bloomberg L.P.
