Oracle stock is in a rare spot. Sales and earnings are growing quickly, but the share price has dropped a lot in recent months. Citi has become more optimistic about this gap. On Thursday, it put Oracle on a positive catalyst watch, showing it expects the stock to rise soon and sees a good chance for investors to buy in. Citi sees this as an opportunity after one of the biggest drops in Oracle’s history, caused by investors giving up and some technical selling.
Debt markets have also affected how investors feel. Like other companies, Oracle has increased spending to win more of the AI market, using both debt and new shares to pay for it. This has made some investors nervous, as the cost to insure Oracle’s debt has gone up a lot since earlier this year.
This rise is not a big worry by itself, but it shows how much Oracle plans to spend. The company is expected to spend about $275 billion over the next three years through May 2029, which is more than three times the $84 billion spent in the last three years. This heavy spending has hurt free cash flow, even though sales and earnings are still growing strongly. Wall Street thinks sales and earnings will grow about 30% each year for the next five years, much higher than the 10% annual growth in the previous five years.
Right now, investors seem to be paying more attention to the risks. Oracle’s stock trades at about 17 times expected earnings for the next year, which is much lower than about 33 times a year ago and far below its highest valuation in September 2025.
Citi says investors are missing an important positive sign: sales and earnings from AI are still very strong across the industry, which is good news for Oracle. Citi pointed to strong recent updates from big AI computing companies, noting that demand is still higher than supply. This is pushing up profit estimates, prices, and margins. Citi expects Oracle to get similar benefits from new AI contracts and thinks sales and earnings growth could end up beating current forecasts.
Citi is still positive on Oracle and has set price targets higher than the Wall Street average. Many other analysts also have a positive view of Oracle, much more than the usual level of optimism seen for S&P 500 companies. Citi’s estimate suggests Oracle could trade at about 33 times its expected 2027 earnings, while the average target is closer to 25 times. Both numbers seem reasonable if Oracle keeps growing earnings by 30% each year.
Oracle shares rose on Thursday, roughly in line with the Nasdaq Composite. Citi’s positive report likely helped, but Nvidia’s strong earnings also seemed to boost AI stocks overall. Nvidia beat expectations and said its 2027 sales could be much higher than Wall Street had previously expected.
The overall excitement about AI is still strong, even if Oracle’s stock price doesn’t fully show it yet. Before Thursday, Oracle shares were still down a lot for the year and over the past 12 months.
