In what appears to be a direct response to Oracle (NYSE: ORCL) issuing a force majeure notice related to its New Mexico data center project on September 24, Stifel Nicolaus analysts reiterated their ‘Buy’ rating for the equity.
Specifically, the Wall Street experts confirmed they retain a positive outlook for ORCL stock and set their price target for the next 12 months at $200 – 43.33% above the latest closing price of $139.54.
The note highlighted that Sifel Nicolaus views the notice as a precautionary measure and not as evidence of a delay, underlining that, in its assessment, Project Jupiter remains on track.
Oracle claims that ‘force-majeure notices are commonplace’
Meanwhile, the force majeure rattled the market and led to Oracle stock plunging more than 5% in the Thursday pre-market before slightly correcting during the regular session and ending the day 3.47% in the red and at $139.54.
The move was allegedly made to ensure the firm remains protected should the facility not come online in 2028 as scheduled.
Notably, Oracle underlined the notice was a precautionary measure, highlighting that such maneuvers are ‘commonplace in developments of this scale’ and reiterating its confidence that ‘Project Jupiter remains on our planned schedule.’
Why investors dumped Oracle stock after force majeure
Still, the force majeure remains a point of concern due to the substantial strain the firm came under due to its data center commitments.
So far, Oracle has accumulated more than $100 billion of debt, including $18 billion that relates to the New Mexico project that moved into ‘strained’ territory approximately one week ago – just months after the firm’s credit rating was downgraded by S&P Global.
Furthermore, the company is facing an uphill battle both concerning actually completing the facilities – even once possible funding issues are disregarded – and regarding getting paid if it succeeds.
Artificial intelligence (AI) data centers have been facing significant community opposition throughout the country as citizens rally to prevent construction, and the technology itself – and American big tech – are suffering something of a crisis of public opinion.
Meanwhile, investors have already demonstrated a certain lack of confidence that OpenAI – a company that has, so far, reportedly seen its expenditures rise far faster than its revenue – will be able to meet its obligations to Oracle, and the equity is down 57.05% since the $300 billion deal between the two was unveiled.
Wall Street analysts remain bullish about Oracle stock despite strain
Elsewhere, despite mounting problems and fears, Wall Street remains relatively confident in the future of the technology giant. Overall, Oracle stock is seen as a ‘Strong Buy,’ per the data Finbold retrieved from TipRanks on September 25.
Furthermore, the bullishness appears relatively overwhelming since ORCL shares boast as many as twenty-seven positive recommendations, four ‘Hold’, and only a single ‘Sell’ rating – assigned by Rothschild & Co Redburn’s Alexander Haissl on September 21 and accompanied by a $110 target.
The average price forecast is likewise optimistic, and Oracle’s equity is expected to rally 76.11% to $245.75% within the next 12 months.
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