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source:TipRanks
content:Oracle Stock (ORCL) Down 42% from Highs But in ‘Pole Position’ to Be AI Leader
==============================================================================
[
Solomon Oladipupo](/news/author/solomon-oladipupo)
A+A-
Story Highlights
Wells Fargo believes Oracle is poised to be an AI leader despite investor concerns about debt tied to its AI efforts.
Enterprise software heavyweight Oracle [(ORCL)](https://www.tipranks.com/stocks/orcl) is in “pole position” to emerge as a leader of the current [artificial intelligence](https://www.tipranks.com/compare-stocks/artificial-intelligence) boom or “super-cycle” despite its stock having fallen 42% from its highs, according to Wells Fargo [(WFC)](https://www.tipranks.com/stocks/wfc).
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The banking giant rated ORCL as Overweight (Buy) with a price target of $280 per share, representing over 39% upside from the stock’s closing price of $201.10 on Tuesday. Wells Fargo’s comment comes as investors have raised concerns about Oracle’s valuation [due to recent debts tied to its](https://www.tipranks.com/news/morgan-stanley-sounds-the-alarm-over-oracle-orcl-debt-risk-surge) [AI](https://www.tipranks.com/compare-stocks/artificial-intelligence) projects.
**Oracle, AI Firms Take on $100B Debt**
---------------------------------------
Oracle is one of several firms, such as SoftBank [(SFTBY)](https://www.tipranks.com/stocks/sftby) and CoreWeave [(CRWV)](https://www.tipranks.com/stocks/crwv), that are positioning to benefit from the AI boom. These firms have collectively [taken on about $100 billion in debt](https://www.tipranks.com/news/softbank-orcl-crwv-take-on-100b-debt-to-fuel-openais-growth-is-it-worth-the-risk) to fuel ChatGPT maker OpenAI’s (**[PC:OPAIQ](https://www.tipranks.com/private-companies/pc:opaiq)**) growth and AI buildout.
However, Wells Fargo is upbeat about this development, noting that Oracle has secured almost $500 billion from its AI deals with AI firms such as OpenAI, billionaire Elon Musk’s xAI, Meta [(META)](https://www.tipranks.com/stocks/meta), and ByteDance’s TikTok. In early September, Oracle and OpenAI [signed a mouth-watering $300 billion cloud deal](https://www.tipranks.com/news/oracle-orcl-inks-massive-300b-cloud-deal-with-openai), one of the largest cloud contracts in history.
The deal, which will see OpenAI buy compute power from Oracle’s AI-tailored data centers, is expected to kick in 2027. Following the news, ORCL surged as high as 40%, marking one of its biggest single-day rallies since 1999.
**Analysts See Potential in Oracle**
------------------------------------
Recently, other analysts [have also backed Oracle](https://www.tipranks.com/news/oracle-stock-orcl-jumps-4-as-top-deutsche-bank-hsbc-analysts-reaffirm-buy-ratings). For instance, [HSBC analyst Stephen Bersey](https://www.tipranks.com/experts/analysts/stephen-bersey) argued that Oracle can ease its balance sheet pressure by using options, including joint ventures or special purpose vehicles.
In addition, [Deutsche Bank analyst Brad Zelnick](https://www.tipranks.com/experts/analysts/brad-zelnick) contended that while the software giant’s deal with OpenAI comes with financial and operational risks, they present a “very real opportunity.” Zelnick noted that Oracle’s AI exposure is undervalued based on how its stock has been priced recently.
**Is Oracle a Buy, Hold, or Sell?**
-----------------------------------
Across Wall Street, analysts remain cautious and have a Moderate Buy consensus rating on [Oracle’s shares](https://www.tipranks.com/stocks/orcl). This is based on 25 Buys, 11 Holds, and one Sell issued by 37 analysts over the past three months.
Moreover, [the average ORCL price target](https://www.tipranks.com/stocks/orcl/forecast) indicates almost 77% upside from the current trading levels.
[](https://www.tipranks.com/stocks/orcl/forecast)
[](https://www.tipranks.com/stocks/orcl/forecast)
**[See more ORCL analyst ratings here.](https://www.tipranks.com/stocks/orcl/forecast)**
[Disclaimer & Disclosure](https://www.tipranks.com/glossary/d/disclaimer-disclosure)[Report an Issue](https://www.tipranks.com/glossary/c/contact-editor)
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title:Oracle Stock (ORCL) Down 42% from Highs But in ‘Pole Position’ to Be AI Leader