MW Oracle's stock is climbing, and these are the big reasons why

By Britney Nguyen

Oracle announced a new cloud agreement. Plus, a Stifel analyst is freshly optimistic about the revenue opportunities ahead of the company.

Oracle Corp.'s stock was upgraded by analysts who see more opportunities for the company's large-scale cloud and artificial-intelligence infrastructure business - and that's just one reason why shares are climbing Monday.

Shares of Oracle $(ORCL)$ are up about 5% in Monday morning action, with the gains also reflecting optimism around a newly announced cloud agreement and the growing likelihood that TikTok stays operational in the U.S.

Analysts at Stifel moved to a buy rating for Oracle's stock in a Sunday note, citing the company's recent "dramatic" increase in capital expenditures and gains from remaining performance obligations that they said would support the company's growth expectations for its cloud business. The analysts see gains from Oracle's infrastructure and software-as-a-service applications generating total revenue increases of about 16% for fiscal year 2026, and about 20% for fiscal year 2027.

The company's RPO, or future revenue that Oracle should receive from existing contracts, has grown 41% in the past year, the analysts said, because of "solid" demand for its infrastructure offerings, such as core compute power and running generative AI workloads.

The Stifel team expects Oracle's total cloud revenue to grow in the high-30% range for each of the next two fiscal years, and to reach $46.5 billion in fiscal year 2027 - also making up about "100% of total company revenue growth over that period of time."

The cloud provider has boosted capital spending, which will result in more compression of its gross margin in the near term, the analysts said. But Oracle's "management team is extremely adept at managing expenses," they added. Additionally, the company's "greater emphasis on physical infrastructure rather than people to generate new business" should help revenue increase "meaningfully faster" than operating costs.

The analysts raised their price target for Oracle's stock to $250 from $180. Shares were changing hands near $220 on Monday, and are 56% over the past three months.

The Stifel analysts also said that Oracle's expanding partnership with OpenAI should contribute to its ensuing cloud revenue growth.

Then on Monday, Oracle disclosed in a regulatory filing that it has signed a cloud services agreement that it expects will add more than $30 billion in revenue annually starting in fiscal year 2028. Oracle Chief Executive Safra Catz is expected to tell employees that the company "is off to a strong start in FY26," and that its MultiCloud database revenue is growing more than 100%, according to the filing.

Mizuho Securities analysts said in a note to clients that this was an update helping to reinforce Oracle's "growing role in large-scale cloud and AI infrastructure."

"This should further [drive] investors' confidence on Oracle's growth momentum," the Mizuho team said. The analysts predict management will also boost its target for $104 billion of annual revenue in fiscal 2029, and that "could be a major catalyst" for Oracle's stock.

Meanwhile, President Donald Trump's comments to Fox News in a segment on Sunday that he has "very wealthy people" ready to buy social-media platform TikTok from its Chinese parent ByteDance "should give investors confidence that TikTok will continue operating in the U.S., even as the current ownership structure faces mounting regulatory pressure," the analysts said.

Oracle co-founder and chief technology officer Larry Ellison could be among the potential bidders for TikTok, the analysts added.

"A resolution that keeps TikTok afloat under new ownership could represent a positive for Oracle," the Mizuho analysts said, since TikTok runs on Oracle Cloud Infrastructure. TikTok "will likely remain a major non-AI OCI customer as long as a competing cloud provider like AWS or Azure is not involved in the eventual buyer group," Mizuho analysts said.

-Britney Nguyen

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June 30, 2025 11:40 ET (15:40 GMT)

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