553 billion US dollars RPO provides growth visibility, Bank of America resumes coverage of Oracle Corporation (ORCL.US) and gives a "buy" rating.

Bank of America Corp has resumed coverage of IT giant Oracle Corporation (ORCL.US) with a "buy" rating and a target price of $200. Analyst Taul Liani stated, "We are resuming coverage of Oracle Corporation with a 'buy' rating and a target price of $200 (approximately 30% upside), reflecting our view on the accelerating demand for artificial intelligence (AI) infrastructure, along with the timing, concentration, and capital requirements balance of Oracle Corporation's transformation process." Bank of America believes, "Oracle Corporation has significant revenue potential in the future, supported by a remaining performance obligation (RPO) of $553 billion related to long-term AI training and cloud infrastructure commitments. This provides solid visibility for significant growth opportunities, but the company still needs to prove its ability to deliver capacity, convert long-term contracts into revenue, and manage capital-intensive construction processes." After a detailed analysis, Liani noted that the three key points of contention for Oracle Corporation in the coming years include: the timing for converting its current remaining incomplete orders into revenue (57% of the $553 billion RPO exceeds three years, 22% exceeds five years); customer concentration, especially considering that OpenAI holds a significant portion of its current remaining performance obligations; and the capital intensity of AI construction, as the company's spending has reached levels comparable to those of a hyperscale cloud services provider. "We believe the company has solid plans in place in these areas, and has discussed both opportunities and related risks," Liani added.