Oracle (ORCL): HSBC Reaffirms Buy, Sets $382 PT Amid Strong Backlog and Data Center Strategy

Oracle Corporation (NYSE:ORCL) is one of the Buzzing AI Stocks on Wall Street. On November 26, HSBC maintained its Buy rating on the stock with a $382.00 price target. The rating affirmation reflects optimism in Oracle’s execution and backlog visibility, but flags the company’s flexibility in finding large-scale data center buildouts.

According to the firm, Oracle hasn’t yet communicated its specific funding approach for building out infrastructure needs, even though there are plenty on the horizon. However, the company has highlighted that large capital-intensive projects can utilize techniques like special purpose vehicles or joint ventures to avoid balance sheet bloat and mitigate risk by delegating to others and the debt markets.

The firm pointed out to Meta’s recent joint venture with Blue Owl Capital as an example of alternative funding structures.

“Meta recently announced a joint venture (JV) with Blue Owl Capital that will issue debt to bond investors through a private offering (source: Meta). The bottom line is that Oracle has successfully contracted over USD500bn of RPO (some of it outside OpenAI), with good revenue timing visibility, and is skillfully planning to meet these commitments.”

The firm believes that Oracle has been refining its data center model for more than a decade to challenge established players such as AWS and Azure. It is also committed to maintaining its investment grade rating and is considering all funding options.

“Oracle has been studying the data center model for more than a decade as it meticulously planned to take share from established players, AWS and Azure. And Oracle has been impressively executing to plan and making tremendous gains against these incumbents. We believe that the company is committed to maintaining its investment grade rating and will consider all funding options, with an eye on mitigating/reallocating risk and potentially using JVs.”

Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.

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