Regarding $Oracle (ORCL.US)$ There is significant market debate regarding Oracle's remaining performance obligations and their primary association with OpenAI. However, Wells Fargo & Co believes these concerns are overstated, and its connection with OpenAI represents a long-term positive factor for Oracle.
Analyst Michael Turrin wrote in a research note to clients: "While at this stage we do not see risks to revenue/earnings per share contributions from OpenAI, we have separately forecasted both OpenAI and non-OpenAI segments to assess their impact."
"(Our estimates) cross-validate based on company guidance and RPO disclosures, projecting revenues of $10 billion, $39 billion, $65 billion, and $78 billion for fiscal years 2027 through 2030. Applying Oracle’s disclosed average gross margin of 35% and our estimated net profit margin of 20%, and assuming no change in the number of shares outstanding, we expect OpenAI to account for approximately 25-30% of Oracle’s earnings per share from fiscal years 2028 to 2030."
Turrin, who rates Oracle as "Overweight" with a price target of $280, stated that the recent sharp decline in Oracle's stock price was an "overreaction." He added that given artificial intelligence is still in a "very early stage," Oracle has the potential to "capture significant market share" in the cloud infrastructure-as-a-service sector.
Oracle released its second-quarter earnings report on December 10, 2025, after which its stock experienced a sharp decline. The database software giant reported revenue that fell short of analysts’ expectations while capital expenditures exceeded forecasts.
Subsequent reports about possible delays in the construction of its data centers for OpenAI became the straw that broke the camel's back. Despite an Oracle spokesperson denying the claims, stating that "there are no delays at any sites fulfilling contractual commitments and all milestones are on schedule," this failed to stop investor sell-offs. The AI sector underwent a harsh 'reality check.'
Editor/Doris