DA Davidson upgraded Oracle to Buy from Neutral, maintaining a $180 price target as concerns over the company's OpenAI exposure appear to be easing. Analyst Gil Luria believes the AI developer's financial position has strengthened significantly, with as much as $40 billion in cash on hand and potential fundraising of another $100 billion by quarter's end.

Luria argues that OpenAI's improved financial stability should ensure it meets its obligations to Oracle, including funding for the data centers the cloud giant is building. The analyst contends that the market has "overshot to the downside" in its assessment of Oracle's relationship with OpenAI, suggesting the current valuation fails to reflect the potential upside from this partnership.

Beyond the OpenAI relationship, DA Davidson highlighted Oracle's core software operations as an underappreciated asset. Luria emphasized that enterprise customers "will not be vibe coded away" and that the company's traditional business alone supports its valuation at 18 times earnings. The firm also pointed to TikTok USA as another potential value driver. However, Oracle's substantial debt load of approximately $130 billion and $248 billion in operating lease commitments remain significant concerns that could burden the company for years to come.

Quick Fact: Oracle's price target was maintained at $180 per share by DA Davidson.