Baird Initiates Oracle with 'Outperform' Rating on AI Tailwinds
The investment firm sees Oracle as a key beneficiary of the AI boom, setting a $365 price target on the stock.
Baird has initiated coverage on Oracle (ORCL) with an 'Outperform' rating, citing the tech giant's strong position to capitalize on the artificial intelligence boom. The investment firm set a price target of $365 for Oracle, suggesting significant upside from its current levels.
In a note to clients, Baird highlighted Oracle's unique combination of scaled infrastructure, database leadership, and extensive enterprise applications as a key differentiator in the increasingly competitive AI landscape. The firm believes this trifecta will create a 'virtuous cycle' of growth, attracting more customers to its cloud platform and driving revenue higher. Baird forecasts that Oracle's revenue growth could accelerate to over 20%, with cloud revenue potentially surging by 40% and accounting for more than half of the company's total sales in the coming years. This optimistic outlook is rooted in the , which is increasingly being chosen for demanding AI workloads.
This bullish call comes at a pivotal time for Oracle. The company has been aggressively expanding its AI and cloud capabilities, with several recent announcements underscoring this strategic focus. Earlier this month, Oracle unveiled its new AI Agents, designed to help businesses uncover new revenue streams. The company is also set to showcase its latest innovations at its upcoming AI World conference. These developments, coupled with a string of new partnerships and product enhancements, paint a picture of a company in the midst of a significant transformation.
Despite the positive outlook, Baird did point to some potential risks, including the high capital expenditures required for data center build-outs and intense competition from other hyperscalers. The market has also shown some recent sensitivity to Oracle's cloud margins, with the stock seeing a brief dip after a report on the profitability of its GPU rental business. However, many analysts believe these are short-term concerns that will be outweighed by the long-term growth potential of Oracle's cloud and AI businesses.
Oracle's stock has had a strong run over the past year, . The company's shares are currently trading off their all-time highs, which could present a buying opportunity for investors who share Baird's positive view on Oracle's AI-driven future. As the company continues to innovate and expand its cloud offerings, all eyes will be on whether it can deliver on the high expectations set by Wall Street.