Oracle’s (ORCL) Long-Term AI Potential Remains Underappreciated, Analysts Say

Core Viewpoint - Oracle Corporation is recognized as a significant player in the AI sector, with Deutsche Bank maintaining a Buy rating and a price target of $375, highlighting the market's underappreciation of Oracle's exposure to OpenAI [1]. Group 1: Stock Performance and Analysis - Oracle's share prices have faced challenges due to concerns over AI capacity commitments and capital expenditure plans related to OpenAI [2]. - Deutsche Bank's analysis indicates a projected $4 reduction in EPS to $17 and a $10 billion reduction in FCF to $31 billion compared to company guidance, suggesting that Oracle is not receiving adequate credit for its OpenAI business at the current share price of approximately $200 [3]. Group 2: Financial Obligations and Flexibility - Concerns have been raised regarding Oracle's long-lived lease obligations, which remain a responsibility regardless of AI customer assumptions; however, there is noted flexibility around these leases [3]. - If Oracle's financials were to account for an estimated 50% of lease expenses related to foregone OpenAI business, it could lead to a further EPS reduction to approximately $15 and FCF to $26 billion [3].