Oracle (NYSE:ORCL) jumped more than 5% at Wednesday’s opening bell after analysts at Deutsche Bank and HSBC issued supportive notes, arguing that the recent selloff—driven by worries over AI-related spending and uncertainty around the company’s partnership with OpenAI—has been overdone.
Deutsche Bank said that despite heightened anxiety surrounding Oracle’s AI infrastructure commitments, “the bear case looks… bullish.”
Analyst Brad Zelnick wrote that even in an extreme scenario where Oracle sees no additional revenue from OpenAI, the long-term impact appears manageable. Under his team’s model for FY30, they estimate “a $4 reduction in EPS to $17 and a $10bn reduction in FCF to $31bn.”
The report added that at roughly $200 per share, Oracle appears to be “getting little if any credit for its business with OpenAI.”
Addressing the debate around Oracle’s sizable data center–related lease obligations, Deutsche Bank acknowledged the concern but said, “we believe there is a good deal of flexibility/fungibility around these leases,” adding that attributing about half of the related costs to Oracle in a downside case still implies earnings of “~$15 and FCF of ~$26bn.”
HSBC also struck an optimistic tone, reiterating its Buy rating and a price target of $382. The firm pointed to market misunderstanding following Oracle’s disclosure of more than $500 billion in remaining performance obligations, saying investors have been “filling in the blanks with little concrete information.”
HSBC emphasized that Oracle is guiding for a 30–40% non-GAAP gross margin in its AI infrastructure segment by FY30 and noted that mixing lower-margin cloud operations with a slower-growing software base “is not a flag of margin deterioration, it is math.”
The bank concluded that Oracle is “skilfully planning to meet these commitments” and sees “upside of 92.2%,” reiterating its Buy rating.