Bank of America just reinstated coverage of Oracle (ORCL) with a Buy rating and a $200 price target. The call comes from analyst Tal Liani, who described Oracle as “a giant going all-in on AI infrastructure and the cloud.” The target implies roughly 30% upside from current levels.
The stock traded between $148 and $155 on March 24 and 25. It has fallen sharply from its 2025 peak of $345.72. The Bank of America target sits well below the Street consensus of approximately $250 to $265. But Liani’s thesis is focused and specific. It centers on one number above all others.
Oracle’s remaining performance obligations, or RPO, hit $553 billion in its most recent quarter. That is up 325% year over year. It is also up $29 billion from the prior quarter.
RPO represents contracted future revenue. It is work Oracle has already been hired to do. Most of the increase in Q3 came from large-scale AI contracts. Oracle noted that many of these deals involve customer prepayments or customer-supplied GPUs, meaning Oracle does not need to raise additional funds to fulfill them.
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Bank of America called this backlog evidence of “large and visible revenue potential.” Liani described Oracle’s reinstatement thesis as “a balanced view of accelerating AI infrastructure demand against the timing, concentration, and capital requirements of Oracle’s transformation.”
Oracle reported its Q3 FY2026 results on March 10. It was the first quarter in more than 15 years in which both organic total revenue and non-GAAP EPS grew by 20% or more in the same period.
The headline figures were strong across the board. Total revenue came in at $17.2 billion, up 22% year over year. Cloud revenue reached $8.9 billion, up 44%. Cloud infrastructure revenue, the piece most tied to AI workloads, hit $4.9 billion, up 84%. Non-GAAP EPS was $1.79, up 21%.
Oracle also raised its FY2027 revenue target to $90 billion and reaffirmed FY2026 revenue guidance of $67 billion. Management stated that demand for AI infrastructure continues to exceed supply.
Bank of America’s Buy rating comes with a clear-eyed view of the challenges Oracle faces. Liani was specific about what needs to go right for the thesis to work:
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Capex is enormous and rising. Bank of America expects Oracle’s capital expenditure to reach approximately $50 billion in FY2026 and continue rising through FY2029. Free cash flow is projected to remain negative over that entire period.
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Revenue conversion is not guaranteed. A $553 billion backlog only matters if Oracle can build the capacity to fulfill it. The bank flagged execution risk as a key condition on the bull case.
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The investment cycle is long. Bank of America acknowledged the strain of front-loaded spending but framed it as typical during disruptive innovation cycles. The thesis depends on performance beyond the investment phase.
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Expectations have already reset. The stock has fallen sharply from its 2025 peak, which Bank of America says has already adjusted the valuation to a more reasonable entry point.
