Oracle surged over 6% intraday, with Wall Street "bottom fishers" expecting the stock price to rebound by 90%.

Oracle’s stock, which had plunged nearly 30% over the past month, rebounded sharply on Wednesday—up as much as 6.6% early in the session and narrowing to under 5% by midday—poised to break out of Tuesday’s lowest closing point in over five months, with a chance to post its best single-day performance since October 13.

Prior to the surge, Deutsche Bank and HSBC both reiterated their “Buy” ratings in recent reports, projecting at least 90% upside from Tuesday’s close and seeing potential for the stock to rise more than 10% above the peak reached in September.

Deutsche Bank analyst Brad Zelnick presented a contrarian view: the bearish reasons investors cite should actually be seen as positives. He pointed out that even if revenue linked to OpenAI is entirely excluded, Oracle’s EPS in fiscal 2030 would fall from $21 to about $17, and free cash flow would drop from $41 billion to $31 billion. Based on the current ~$200 stock price, the market is attributing almost no value to Oracle’s OpenAI business.

HSBC also maintained its “Buy” rating and $382 price target, implying a 92% upside from current levels. The bank noted the market is “filling in the blanks in the absence of specific information,” creating unnecessary panic.

Their optimism stands in stark contrast to market concerns over Oracle’s more than $500 billion in Remaining Performance Obligations (RPO) and commitments to data center leases. Last month, Oracle disclosed that it secured about $65 billion in incremental RPO from seven contracts across four clients, pushing its total RPO above the $500 billion mark.

Wallstreetcn previously noted that in the AI infrastructure investment boom, RPO has become a key metric to assess tech giants’ true future revenue, growth quality, and potential risks. Oracle’s RPO has surged an astonishing 411% over the past six quarters, mostly from long-term multi-year contracts. Longer contracts face higher renegotiation risks. If client demand or pricing dynamics change, companies may be forced to make concessions on price, terms, or service volume to retain customers.

For companies like Oracle, whose RPO growth is fueled by emerging businesses, the costs of fulfilling these massive contracts (including infrastructure, personnel, and maintenance CapEx) are highly uncertain—directly impacting their eventual return on these contract revenues.

Deutsche Bank: Bear thesis actually bullish

Deutsche Bank reaffirmed its “Buy” rating and $375 target on Oracle. Analyst Brad Zelnick estimates that even if Oracle gets zero incremental revenue from OpenAI, the impact is relatively limited: FY2030 EPS drops only by $4 to ~$17, and free cash flow falls by $10B to $31B.

Zelnick believes that, at the current ~$200 price, the market is providing little—or no—valuation for Oracle’s OpenAI business. Even accounting for potential lease burdens from unused AI capacity, Oracle’s FY2030 EPS would still approach $15 per share, and free cash flow about $26 billion.

Deutsche Bank notes that while the Oracle-OpenAI deal introduces financial and operational risks, these are offset by the “very real opportunity” the partnership brings. The bank highlights Oracle's current PE ratio of 27x—which may appear high due to upfront AI expansion costs—but argues these are temporary, and the real opportunity from OpenAI’s backlogged orders should more than compensate.

HSBC maintains high target, says market panic is excessive

HSBC maintains its “Buy” rating and $382 target, implying 92% upside. The bank says concerns about Oracle’s $500B+ RPO come from a lack of information.

HSBC points out that Oracle has provided FY2030 guidance of 30%-40% non-GAAP gross margin for AI infrastructure, a reasonable level. Combining low-margin cloud services with slower-growing software is “just a math problem,” not a red flag.

The bank believes Oracle is “skillfully planning to meet these commitments,” and is confident in the company’s execution. Both HSBC and Deutsche Bank stress that the market is missing the bigger picture: Oracle’s AI infrastructure investment is upfront expenditure, with the revenue coming later—this is how major infrastructure deals operate.

DA Davidson turns cautious, questions OpenAI commitment

Not all firms are optimistic. On Tuesday after the close, DA Davidson cut its target on Oracle from $300 to $200, maintaining a neutral rating.

The firm points out that Oracle hinted in its September earnings that multiple clients were driving RPO growth, but the next day, OpenAI was revealed to have contributed nearly all of the increment. According to media reports from September 10, OpenAI committed to purchase $300 billion in computing from Oracle over five years—its largest commitment ever—making Oracle appear the winning bidder.

But DA Davidson notes that after this announcement, OpenAI’s total commitment exceeded $1 trillion, indicating OpenAI “is not a serious counterparty” and Oracle is just a pawn in a “fake-it-til-you-make-it” game.

Investor worries: debt and AI profitability

Oracle’s stock has fallen about 30% in the past month—and about 41% from its September peak—mainly due to worries over its surging debt load and outsized reliance on the OpenAI mega-deal.

The company’s debt has risen sharply to fund massive AI and cloud infrastructure expansion. Free cash flow has turned negative by about $5.9 billion, the weakest in decades. Its debt-to-equity ratio is now far above industry norms, applying pressure to shareholders and bond investors. Credit default swap costs have soared, reflecting cautious attitudes in the credit markets.

Reports indicate data center construction loans tied to Oracle have reached at least $65 billion this year, associated with the $300 billion OpenAI cloud deal. This borrowing binge has raised concerns among data center lenders and the credit market. Oracle is preparing a $38 billion bond issue to build AI and cloud data centers in the USA.

Cloud profitability also worries investors: margins remain thin, well below some competitors. The company’s heavy ongoing spend on infrastructure, data centers, and operations drags on short-term earnings. Some executives have even sold stock during the recent drop, raising worries that management isn’t bullish on a near-term rebound.

“Bottom pickers” see oversold entry opportunity

Despite Oracle’s challenges, some analysts believe the stock may have been oversold. Technical indicators show it’s now in oversold territory, often a sign a rebound may be near.

Analysts who support a “buy the dip” strategy say Oracle still commands a massive AI and cloud backlog—including the high-profile OpenAI deal—and, if execution and demand hold, could generate strong revenues. For long-term investors, this may be a low-entry opportunity before a rebound.

Oracle’s fiscal Q4 2025 shows AI and cloud investments are paying off: cloud infrastructure revenue soared 52% year-on-year to $3B, thanks to strong AI workload and multi-cloud demand. RPO jumped 41% to $138 billion, indicating strong order backlog and forward visibility.

Among 45 analysts covering Oracle, 32 rate it “Buy” or higher. Analyst consensus remains generally positive. The company forecasts FY2026 cloud growth over 40% and cloud infrastructure growth over 70%, driven by AI demand.

However, real risks remain. If AI momentum slows or cloud demand softens, Oracle could struggle to service its debt. Short-term volatility may persist, so investors must closely watch quarterly results, cash flow, and cloud trends.

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