Oracle (NYSE: NYSE:ORCL), the veteran database software specialist and cloud services provider, saw its stock rise over 2% on Tuesday, outperforming the S&P 500 index which declined by 0.4%. The surge in Oracle's shares was primarily driven by an upgrade in the recommendation of Barclays (LON:BARC) analyst Raimo Lenschow.
Lenschow, who had previously tagged Oracle's stock as equal weight (hold), upgraded his recommendation to overweight (buy) before the market opened on Tuesday. Along with this, he also increased the price target for Oracle's stock to $150 per share from the previous $126.
The Barclays analyst is bullish on Oracle's potential in its relatively recent next-generation services. He referred to the company's software-as-a-service (SaaS) and Oracle Cloud Infrastructure (OCI) offerings in a new research note, stating that he sees a multiyear opportunity for solid growth at high margins due to a positive mix effect of better SaaS and OCI outweighing the lower growth parts of the business.
Lenschow also expressed enthusiasm about Oracle's opportunities in the artificial intelligence (AI) sector, which is currently a hot segment of the tech industry. He noted that OCI is "positioned favorably" for AI applications, and highlighted Oracle's close relationship with Nvidia (NASDAQ:NVDA), a chipmaker whose products are seen as a good fit for AI functionalities.
This optimism about Oracle is not limited to Lenschow. On average, analysts tracking the stock expect the company to increase both its revenue and per-share profitability by around 8% this year over fiscal 2023. For the following fiscal year, analysts predict a similar growth rate for revenue, while profitability is expected to rise by a robust 13%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.