Goldman Sachs Initiates Coverage on Oracle (ORCL) With Buy Rating and $240 Target,

Core Viewpoint - Oracle Corporation is recognized as a significant player in the AI sector, with analysts expressing optimism about its growth potential and technology advantages in AI compute workloads [1][2]. Group 1: Analyst Coverage and Ratings - Goldman Sachs analyst Gabriela Borges initiated coverage on Oracle with a "Buy" rating and set a price target of $240, indicating strong confidence in the company's future performance [1]. - Analysts expect Oracle's share of new cloud revenue to increase from less than 10% today to an estimated 25% within three years, highlighting the company's growth trajectory in the cloud market [2]. Group 2: Financial Projections and Profitability - There is an anticipation of revenue reacceleration this year as additional phases of the 1.2GW Abilene data center come online, which is expected to enhance Oracle's financial performance [2]. - Gross profit is projected to bottom out before experiencing meaningful acceleration, suggesting a potential turning point in profitability [3]. Group 3: Debt and Investment Considerations - Analysts believe Oracle is nearing peak debt levels, with expectations that the company will execute its data center build with less than $80 billion in debt raised, aligning with company guidance [3]. - For Oracle to be considered a long-term investment, analysts are looking for clearer indicators of sustainable growth and pricing beyond 2030, particularly in its database and applications business, which constitutes approximately 30% of sales [4]. Group 4: Market Position and Comparisons - While Oracle shows potential as an investment, some analysts suggest that other AI stocks may offer greater upside potential with less downside risk, indicating a competitive landscape in the AI sector [5].