Oracle’s stock surged after a report revealed that the company is expanding its Stargate data-center project with OpenAI, a ChatGPT maker. The deal involves renting 4.5 gigawatts of new U.S. data center capacity, sending shares up 3.2% to $237.35 on Thursday.
Analysts at TD Cowen believe that the news confirms their earlier speculation about Oracle’s large cloud services agreement with OpenAI. They now expect total revenue growth to exceed 50% in fiscal 2028 and for the company’s revenue run rate to grow beyond $30 billion per year as more capacity comes online.
The deal also supports another analyst’s thesis that Oracle’s openAI contract could be a $150 billion remaining performance obligation contract, which would significantly boost the company’s revenue. Additionally, the expansion is seen as an attractive opportunity for capital appreciation, given Oracle’s long-term leadership and its cloud infrastructure offering.
Overall, 41 analysts polled by FactSet rate Oracle at Buy or Hold, with 26 rating it a Buy and 15 a Hold. The stock has gained 39% this year, outperforming the S&P 500.
Source: https://www.barrons.com/articles/oracle-openai-ai-deal-stock-888d6e52