Oracle (ORCL.US) Cloud Business Takes Off, Institutions Expect Multiple Years of High-Growth

Our APP has learned that Bernstein, a well-known investment institution on Wall Street, believes that Oracle's cloud computing business is at the takeoff stage and will experience rapid growth in the next few years. The analyst Mark Moerdler reiterated his "outperform" rating for Oracle's stock on Tuesday, raising his target price from $269 to $308, reflecting his strong confidence in the company's long-term prospects.

As of Tuesday's closing, Oracle's stock price rose 1.24%, reaching $255.67, with a year-to-date gain of 55%, far exceeding the 9% gain of the NASDAQ Composite Index during the same period.

Moerdler pointed out in his report: "We expect Oracle's growth to accelerate in the next few years. The company is currently at the initial stage of a large-scale cloud transformation, with its Oracle Cloud Infrastructure (OCI) poised to become the world's fourth-largest cloud infrastructure services provider."

Oracle is rapidly becoming the preferred third-party cloud service provider for leading AI model companies, while maintaining close collaboration with AI chip giant NVIDIA. Company executive Mahesh Thiagarajan revealed in an interview last year that four out of five major AI language model developers are currently using Oracle's data centers.

Moerdler expects Oracle to achieve average annual revenue growth of "mid-teens" (13%-17%) over the next 5-10 years. Although the company's free cash flow may be affected by short-term investment expenses in the near future, it is expected to experience a significant increase from a long-term perspective.

In addition to Bernstein, Goldman Sachs Global Research also raised its target price for Oracle from $220 to $295 on Tuesday, maintaining its "neutral" rating. The institution noted that it expects the strong demand for AI infrastructure will continue to benefit Oracle's cloud service business.

It is worth noting that in June this year, Oracle disclosed in a regulatory filing that CEO Safra Catz said the company had a strong start to the year and signed several large-scale cloud services agreements. One of these contracts is expected to contribute more than $30 billion in revenue annually starting from 2028, providing strong support for the company's long-term growth.