Oracle is making good progress toward becoming a primary infrastructure provider for artificial intelligence models, which should propel its stock higher, according to Wedbush Securities. The research firm initiated the software giant with an outperform rating. It also put a $225 rating on shares, implying 27.6% upside from Thursday’s close. “We believe Oracle is on a path to become a foundational infrastructure provider for the AI Revolution, and the market is fundamentally misinterpreting the company’s aggressive, contract-backed investment cycle as speculative risk,” analyst Dan Ives said in a note to clients. He noted that Oracle is in “the early innings of a significant repositioning.” Executives at Oracle have already signed several deals with Silicon Valley heavyweights to bring their business closer to that objective, Ives added. In 2025, Oracle agreed to sell $300 billion worth of computing power to OpenAI over a five-year period, beginning in 2027. The AI infrastructure company also struck a deal with Nvidia to accelerate enterprise AI by integrating Oracle Cloud Infrastructure (OCI) with Nvidia’s full-stack AI computing platform. Despite the cash flow from those deals, some investors are concerned that Oracle is allocating too much money to its infrastructure initiatives. But, those fears are largely overblown, according to Ives. “The downside case against Oracle centers on its capital expenditures and negative free cash flow,” Ives wrote. “However, we argue this view is backward-looking and fails to appreciate the scale of contracted demand underpinning the investment.” Ives also pointed out that Oracle has several sources of funding that it can tap to continue powering its operations. “Oracle is executing its $45-$50 billion capital raise, and ORCL has raised $30 billion already through a combination of investment grade bonds and mandatory convertible preferred stock, which is a strategic move to fortify its balance sheet and secure the resources needed to meet its contractual obligations,” the analyst wrote. Ives’ call is in line with consensus on the Street. Of the 46 analysts covering Oracle, 35 have a buy or strong buy on the stock, according to LSEG. Shares are up 28% over the past year. However, they have slid nearly 10% in 2026 amid ongoing concerns over AI firms’ eye-watering capital expenditures.
