UBS released a research report highlighting Oracle's (ORCL, Financial) announcement of several large-scale cloud service contracts at the end of last month. One notable contract is expected to contribute $30 billion in revenue annually starting from the fiscal year 2028, boosting Oracle's stock price by 15%. This development is anticipated to have significant implications for Oracle, Microsoft (MSFT), and OpenAI.
The partnership is expected to involve OpenAI's reasoning and training services. If the customer is confirmed to be OpenAI, it could negatively impact Microsoft. However, the collaboration's success will depend on the progress of the Abilene data center and Stargate GPU cluster, posing a potential delay risk.
UBS has revised Oracle's financial projections, raising its fiscal 2029 income forecast from $109 billion to $134 billion, while reducing the operating profit margin from 41% to 38%, compared to the current guidance of $104 billion and 45%. Capital expenditure estimates have been increased from $35 billion to $54 billion, and the earnings per share prediction for 2027 has been raised by 2%. UBS also increased Oracle's target price from $250 to $280, maintaining a "buy" rating.
