Oracle stock ORCL rose on Tuesday as a fresh round of bullish analyst commentary put the technology company back in focus ahead of its fiscal first-quarter earnings report, while the launch of OpenAI’s latest artificial intelligence model provided investors with another reason to reassess the company’s growth prospects.
Shares climbed nearly 4% on Tuesday, although Oracle remains down nearly 17% this year and about 32% over the past 12 months.
The stock has faced pressure as investors have grown increasingly concerned about the debt and cash requirements associated with Oracle’s aggressive expansion of AI infrastructure.
However, expectations for accelerating cloud growth, alongside Oracle’s growing relationship with OpenAI, are helping shift attention back toward the potential upside.
OpenAI model could strengthen Oracle’s cloud outlook
OpenAI launched ChatGPT-6 Astra last week, with its latest model receiving strong attention online and raising expectations that the ChatGPT maker could regain ground in the increasingly competitive AI race.
Anthropic and Alphabet’s Google have periodically received stronger reviews for their own AI models in recent years, but Astra’s reception has fuelled hopes that OpenAI can once again establish a technological lead.
That could matter for Oracle because the two companies have a $300 billion cloud supply agreement, with Oracle rapidly expanding its data-center capacity to meet OpenAI’s computing requirements.
“It looks like OpenAI is turning things around, and Astra is ahead of Fable on multiple benchmarks,” Morningstar analyst Luke Yang told MarketWatch, referring to rival Anthropic’s Fable model.
“This boosts investors’ confidence with Oracle’s OpenAI backlog,” or the dollar amount of commitments yet to be recognized as revenue.
Yang also pointed to Astra’s ability to perform more complex tasks as a potential driver of additional computing demand.
He said the model has the “complete ability to operate a computer,” allowing new use cases and products to potentially “complete entire workflows that previous models aren’t able to do.”
Astra remains available only to a relatively small group of users for now.
But Yang said that if OpenAI can make a “breakthrough on the product front,” it could increase demand for computing power and provide further support for Oracle shares.
Analysts see room for a stronger earnings performance
Wall Street expects Oracle to report revenue of about $19.1 billion, an increase of nearly 28% from a year earlier, alongside earnings of $1.74 per share.
The options market is pricing in a move of roughly 11.2% in either direction following the results, highlighting the unusually high level of uncertainty surrounding the earnings announcement.
Mizuho reiterated its Outperform rating and $320 price target ahead of the results.
The firm expects Oracle to exceed consensus estimates, driven primarily by stronger-than-expected performance from Oracle Cloud Infrastructure.
Mizuho estimates that approximately 1 gigawatt of capacity will come online in the first quarter, compared with around 1.2 gigawatts delivered during the entirety of fiscal 2026.
The firm said another earnings beat would reinforce improving execution and increase confidence in Oracle’s fiscal 2027 guidance.
Oracle’s revenue growth of 17.35% over the last 12 months has also supported the bullish case, while analysts are forecasting 34% revenue growth for fiscal 2027.
Mizuho said maintaining fiscal 2027 revenue guidance will be particularly important as investors assess the potential for delays or disruption surrounding Project Jupiter, Oracle’s major data-center buildout.
The firm sees a path for Oracle shares to re-rate as financing concerns ease, visibility into a free-cash-flow inflection improves, and the company’s Oct. 28 Investor Day provides another potential catalyst.
Financing remains a key concern
Guggenheim also maintained a Buy rating on Oracle and a $400 price target ahead of the earnings report.
The firm identified Oracle’s planned $20 billion at-the-market equity raise as the biggest concern weighing on the stock since the company’s fourth-quarter results, even exceeding concerns over its reliance on OpenAI.
Oracle did not issue equity during the fourth quarter of fiscal 2026, but Guggenheim said investors will be looking for evidence of meaningful progress this quarter.
The firm said discussions with rating agencies suggest equity would probably need to form part of the remaining $20 billion financing plan to satisfy debt investors.
Guggenheim nevertheless believes Oracle has moved beyond the riskiest phase of its infrastructure expansion and noted that maintaining an investment-grade credit rating remains the CFO’s top priority.
Bullish calls build ahead of results
The latest analyst upgrades and reiterations follow already positive commentary from Wall Street.
Bank of America analyst Tal Liani said he sees an attractive risk-reward setup heading into the earnings announcement. He maintained a Buy rating and a $240 price target.
“We favor the risk/reward of Oracle, as we believe Street consensus already captures the challenging balance sheet fundamentals,” Liani wrote on Friday, “yet is not fully incorporating the likelihood of revenue growth acceleration related to reaching DC buildout milestones.”
Morgan Stanley analyst Sanjit Singh has similarly described Oracle as a “good setup” heading into earnings and expects cloud revenue growth of 63% from a year earlier.
AI opportunity comes with concentration risk
Despite the optimism surrounding OpenAI and Oracle’s cloud expansion, the company’s growing dependence on a handful of major AI customers presents a separate risk.
A substantial portion of Oracle’s increase in remaining performance obligations has come from large AI contracts.
Oracle has also said that prepaid and customer-supplied hardware associated with large AI agreements now totals $75 billion, reducing the amount of capital it needs to raise for the related data-center construction.
That is positive from a financing perspective, but investors are likely to scrutinize how much of Oracle’s future growth depends on a relatively small group of customers, Axel Rudolph, FSTA, Chief Technical Analyst at IG.com, wrote.
“The market will be particularly interested in developments surrounding Oracle’s relationship with OpenAI and other major AI customers,” Rudolph said.
With the stock still well below its levels of a year ago, Thursday’s results could prove pivotal in deciding whether Oracle can turn renewed AI optimism into a sustained recovery.
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