For much of the AI boom, Oracle Corp (NASDAQ:ORCL) has been viewed as a legacy software company racing to catch up with cloud leaders. JPMorgan believes that perception is increasingly outdated.
Analyst Samik Chatterjee recently reiterated its Overweight rating on Oracle and assigned a $200 price target, implying more than 30% upside from the stock’s Aug. 12 closing price of $153.28.
More importantly, the bullish call isn’t simply based on faster earnings growth—it rests on the idea that Oracle is evolving into an AI infrastructure company, a transformation that could eventually command a higher valuation multiple.
Oracle’s AI Transformation Is Accelerating
Oracle’s cloud ambitions have grown well beyond traditional enterprise software. JPMorgan expects Oracle Cloud Infrastructure (OCI) and infrastructure-as-a-service (IaaS) revenue to expand from $18 billion in fiscal 2026 to $180 billion by fiscal 2030, a tenfold increase that would place Oracle firmly alongside hyperscale cloud providers such as Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) Google.
Chatterjee argues that this expansion is supported by an unusually strong pipeline. Oracle ended the latest quarter with $638 billion in remaining performance obligations (RPO), representing contracted future revenue that includes agreements with customers such as OpenAI and Meta Platforms, Inc. (NASDAQ:META).
Combined with projected 33% annual revenue growth and approximately 29% annual earnings-per-share growth through fiscal 2030, JPMorgan believes Oracle’s financial profile is changing far more rapidly than its valuation suggests.
In other words, JPMorgan sees Oracle becoming less like a mature software company and more like an AI infrastructure provider with a rapidly expanding cloud business.
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Why Investors Remain Skeptical
If Oracle’s growth outlook appears compelling, why does the stock continue to trade at a discount?
According to JPMorgan, the market is fixated on the enormous cost of Oracle’s AI expansion. Building data centers capable of supporting AI workloads requires substantial upfront investment, and the brokerage estimates Oracle could need to raise roughly $20 billion of capital annually, including about $40 billion in fiscal 2027, to support its infrastructure build-out.
Those financing needs have fueled concerns about rising debt levels and the possibility of future equity issuance, weighing on investor sentiment even as Oracle’s AI business continues to expand.
JPMorgan, however, believes investors may be focusing too heavily on those near-term financing risks while underestimating the earnings potential of the infrastructure being built.
A Re-Rating Could Become Oracle’s Biggest Catalyst
The brokerage’s central argument is not that Oracle’s capital requirements will disappear. Rather, it believes the market is undervaluing what those investments could produce.
As AI infrastructure becomes a larger share of Oracle’s business, JPMorgan expects the company to maintain healthy operating margins while benefiting from significantly higher revenue and earnings. That combination, the analysts argue, could justify a valuation multiple closer to those enjoyed by AI infrastructure peers rather than traditional enterprise software companies.
For investors, that distinction matters. The upside case for Oracle is no longer simply that cloud revenue will continue growing. It is that the market may eventually stop valuing Oracle as yesterday’s software company and start valuing it as an AI infrastructure leader.
Read Also: Wall Street Is Valuing Oracle's $630B AI Backlog at 'Zero'
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