Oracle (ORCL) Stock Jumps 40% in May on OpenAI Optimism – Time to Buy?

TLDR

• Oracle stock surged 39.9% in May, bouncing off April lows near $150 after concerns about OpenAI eased.
• OpenAI raised new funds and signaled it’s on track with revenue targets, calming fears around Oracle’s data center contracts.
• Oracle’s cloud infrastructure revenue grew 81% year over year last quarter to $4.9 billion, but remains well below rival cloud players.
• Citi raised its price target on ORCL to $330 from $320, keeping a Buy rating and citing accelerating infrastructure-as-a-service growth.
• ORCL dropped 5.7% in Thursday’s session despite beating Q3 earnings estimates, as investors weighed heavy AI spending commitments.

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Oracle (ORCL) stock had a standout month in May, jumping 39.9% after a rough stretch that saw the stock fall below $150 in April. The selloff had been driven largely by investor nerves around OpenAI, Oracle’s key infrastructure partner, and questions about whether it could sustain its massive spending commitments.

Oracle Corporation, ORCL

Those fears began to lift as OpenAI turned a corner this spring. The AI company raised fresh capital, outlined plans for an IPO, and gave investors reassurance that it’s on track with its revenue targets for the year. That was enough to reignite confidence in Oracle’s own growth story.

Oracle’s cloud infrastructure revenue came in at $4.9 billion last quarter, up 81% in constant currency. That’s fast growth by any standard, though it still lags Amazon and other major cloud providers.

The connection to OpenAI runs deep. Oracle has $553 billion in remaining performance obligations — up 325% year over year — with OpenAI representing a large chunk of that backlog. The company has taken on substantial debt to build out data centers that power OpenAI’s systems, giving it a major stake in OpenAI’s continued success.

What the Numbers Say

Oracle’s Q3 results, reported on March 10, were solid. The company posted EPS of $1.79, beating consensus estimates of $1.71, on revenue of $17.19 billion — above the $16.91 billion analysts expected. Revenue rose 21.7% year over year. The company guided Q4 2026 EPS to a range of $1.96 to $2.00.

The stock currently trades at a P/E ratio of around 41, with $125 billion in long-term debt on the balance sheet. Its 52-week range runs from $134.57 to $345.72, and the stock opened Thursday at $230.53.

Despite that strong earnings beat, ORCL fell 5.7% in Thursday’s trading session. Investors appeared to be taking some gains off the table after the May run-up, while also weighing the long-term risks that come with Oracle’s deep AI infrastructure bet.

Analysts and Institutions Still Buying In

Citi raised its price target on ORCL to $330 from $320 on June 4, keeping its Buy rating intact. The firm expects Oracle to post an in-line Q4, with accelerating infrastructure-as-a-service growth. It pointed to the stock’s recent multiple expansion as the reason for bumping the target.

On the institutional side, Sivia Capital Partners increased its Oracle stake by 79% in Q4, purchasing 4,470 additional shares to bring its total holding to 10,126 shares worth roughly $1.97 million. Several other smaller firms also added new positions during the same period, including Basepoint Wealth and Joseph Group Capital Management.

Insiders have been less enthusiastic. EVP Stuart Levey sold 15,000 shares at an average of $176.19 on April 16, reducing his ownership stake by over 81%. The sale was executed under a pre-arranged 10b5-1 trading plan.

Oracle’s dividend yield currently sits at 0.87%, with a quarterly payout of $0.50 per share. Sell-side analysts forecast full-year EPS of $6.08 for the current fiscal year.