Wells Fargo Initiates Oracle (ORCL) With Overweight, Sees Major AI Upside Ahead

Core Viewpoint - Oracle Corporation is gaining attention as a significant player in the AI infrastructure market, with analysts projecting a strong growth trajectory and a favorable long-term outlook [1][2]. Group 1: Analyst Coverage and Ratings - Wells Fargo initiated coverage of Oracle with an "Overweight" rating and a price target of $280, indicating confidence in the company's potential to capture AI infrastructure market share [1]. - Analyst Michael Turrin highlighted that Oracle's shares are currently "42% off highs" and are valued at an estimated 25 times FY27 earnings, suggesting potential for upside [1]. Group 2: Market Position and Growth Projections - Oracle is positioned to become a significant market share gainer in the infrastructure sector, with projections indicating it could reach a scale comparable to the next closest hyperscaler by 2029 [2]. - Oracle Cloud Infrastructure (OCI) is expected to experience sharp growth, with market share potentially rising to approximately 16% of the cloud market by 2029 [3]. - The company's success in securing major AI infrastructure projects, such as OpenAI's $300 billion compute contract, underpins its growth potential [3]. Group 3: Valuation and Investment Outlook - The $280 price target is based on a 30 times price-to-earnings ratio on forward estimates, which, while above historical levels, is considered reasonable given the significant AI opportunities ahead [3].