Jefferies: Oracle could be $400 but trails hyperscalers

After Oracle’s fiscal first-quarter report, Jefferies senior analyst Brent Thill projected the company could be worth roughly $400 over the long term, citing stronger-than-expected results and accelerating cloud revenue. He placed Oracle in a “tier 2” group behind Microsoft, Amazon and Alphabet for AI infrastructure exposure.

Oracle beat estimates for the quarter and set a target for adjusted earnings of $8.10 a share alongside a goal of at least $90 billion in annual revenue by 2027. The firm’s remaining performance obligations rose 46% year over year, and its cloud infrastructure business expanded by about 120%.

Thill maintained a Buy rating on Oracle with a $290 price objective, which implies roughly 80% upside from recent levels. He referenced management’s expectation of $20 in earnings power three years out and noted that outcome would support a higher valuation over time.

He flagged valuation and balance-sheet risks, including negative free cash flow of $5.4 billion in the quarter, a larger debt load and a weaker credit rating. Thill also pointed to concentration risk related to large AI partners such as OpenAI.

Thill described the 120% infrastructure growth as one that “throws concerns of AI capex and no ROI right out the window” and characterized the fiscal Q1 report as “there wasn’t any issue.”

He recommended Microsoft, Amazon and Alphabet as core cloud holdings, citing their larger balance sheets, higher core-business multiples and broader market reach. Thill suggested Oracle may represent a discounted AI-infrastructure option for tactical investors. Oracle’s dividend yield is about 1.31%.