If This Wall Street Analyst Is Correct, This Artificial Intelligence (AI) Data Center Stock Will Join Nvidia, Apple, and Meta in the $1 Trillion Club
Key Points
Wall Street analysts typically assign price targets for stocks based on a 12- to 18-month outlook.
One artificial intelligence data stock has struggled immensely over the last six months.
But one analyst thinks there's a tremendous opportunity for this company to prove the market wrong and join an exclusive group of stocks at the top.
- 10 stocks we like better than Oracle ›
Oracle (NYSE: ORCL) burst onto the scene last year as a big player in the artificial intelligence space, but its meteoric rise was short-lived. The stock has nearly been cut in half over the past six months, as investors question whether all of Oracle's deals will come to fruition, and whether the debt needed to fund its artificial intelligence (AI) data center build-out will yield good returns.
While there's broad debate across the market, Oracle's stock can surge and join an exclusive group of stocks in the $1 trillion club, which includes Nvidia, Apple, and Meta Platforms, if this one Wall Street analyst is correct.
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Why Oracle stock surged on AI momentum and then crashed
Last September, Oracle delivered incredible fiscal first-quarter earnings results and forward guidance, as investors realized the company's AI data center business had real legs. The company reported remaining performance obligations (RPOs), which are revenue that has been contracted but not yet delivered, of $455 billion in the quarter ended Aug. 31.
Image source: Getty Images.
Furthermore, management said it expected cloud infrastructure revenue to reach $18 billion in its current fiscal year 2026, $32 billion in fiscal 2027, $73 billion in fiscal 2028, $114 billion in fiscal 2029, and $144 billion in fiscal 2030. The stock soared about 40% immediately following this earnings report.
However, it wouldn't last long. Investors soon found out that $300 billion of the RPOs came from a multiyear deal with OpenAI, which has made total data center commitments totaling $1.4 trillion over eight years. This raised questions about how OpenAI would pay for all of this.
Oracle also had to raise as much as $50 billion of debt to finish its AI data center build-out, and other media reports indicated last year that margins in Oracle's data center business were not particularly strong. The company has also reported negative free cash flow in recent quarters.
Can Oracle stock hit $400?
The big sell-off and other recent events have made Wall Street analysts more bullish on Oracle, with the consensus Street price target suggesting over 60% of upside, according to TipRanks.
In fact, the most bullish analyst, Guggenheim's John DiFucci, has a $400 price target on Oracle, suggesting nearly 170% upside. If this comes to fruition, Oracle's market cap would rise from about $429 billion to over $1 trillion, joining an exclusive group.
DiFucci's optimism comes from Oracle's recent fiscal third-quarter results, in which the company demonstrated strong AI demand and also vowed not to raise any more debt, at least this year. The company also had $553 billion of RPOs and reported that demand for AI infrastructure is still outpacing supply.
DiFucci is not only optimistic about cloud AI infrastructure but also about Oracle's leading database technology and growing applications business. He thinks if Oracle can deliver on its commitments to clients, that would likely help reassure investors.
In other good news, OpenAI also completed a successful $120 billion private financing round, adding confidence that the company can meet its infrastructure commitments over the next eight years.
While OpenAI hit an annualized revenue rate of $25 billion in 2025, the company also has a new ad business that could be huge in a few years, and will also likely conduct an initial public offering at some point, where it can raise another massive pile of capital.
While I'm not sure Oracle can necessarily hit $400 per share in the next year or two, I believe the sell-off has made the risk-reward proposition much more appealing. Investors can start accumulating shares at this level and wait for more evidence that the company can fulfill its obligations, and that OpenAI can also meet its commitment.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Meta Platforms, Nvidia, and Oracle and is short shares of Apple. The Motley Fool has a disclosure policy.
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