German bank Deutsche Bank goes against the market to support Oracle Corporation (ORCL.US): The pessimistic outlook is actually a bullish signal, with AI opportunities far outweighing financial risks.

In the midst of concerns about Oracle Corporation's (ORCL.US) high spending and its impact on the company's financial health, Deutsche Bank Aktiengesellschaft has stated that the market's bearish logic on the company may actually be a "buy" signal. Deutsche Bank analyst Brad Zelnick wrote in a client report that assuming Oracle Corporation's expectations for the 2030 fiscal year do not include any revenue and expenses from OpenAI, "our research shows that in this scenario, earnings per share (EPS) would decrease by $4 to $17, and free cash flow (FCF) would decrease by $10 billion to $31 billion. Discounting these figures back to the present value, it means that at the current price of around $200, the company is hardly receiving a valuation premium for its business relationship with OpenAI." The Deutsche Bank analyst has a "buy" rating on Oracle Corporation with a target price of $375. He acknowledges that concerns about leasing liabilities do exist, but also points out that these liabilities "likely have considerable flexibility/substitutability." However, he also adds that if these liabilities ultimately become a burden on Oracle Corporation's finances, earnings per share could drop to around $15 and free cash flow could drop to around $26 billion. The analyst further explains, "Given that Oracle Corporation's current stock price corresponds to a 27x price-to-earnings ratio of consensus EPS for the 2026 calendar year (which is dragged down by upfront costs required for expanding its AI business), the market seems reluctant to pay a premium for future growth, preferring to buy based on visible near-term performance." "Although we acknowledge financial and operational risks, we believe that these risks are far outweighed by the real and significant opportunity that exists - the backlog of OpenAI's business represents a reliable return on investment (ROI), with projects progressing according to plan and validating Oracle Corporation's leading position in deploying AI cloud infrastructure at scale."