Analyst Note – Piper Sandler Defends Oracle Rating
Piper Sandler reiterated its Overweight rating on Oracle in a client note dated 06‑07‑2026, arguing that the company could generate approximately $2.2 bn of Oracle Cloud Infrastructure (OCI) revenue that is not currently reflected in consensus estimates. The firm’s estimate is derived from an analysis of Oracle’s capital‑expenditure (capex) to data‑center capacity conversion.
Analyst Billy Fitzsimmons acknowledged that Oracle remains a “controversial name” within Piper Sandler’s coverage because of ongoing concerns around capital requirements, AI monetisation, customer concentration, and margins. Nevertheless, he described the outlook as constructive, citing three key factors: the firm’s OCI analysis indicating accelerating revenue growth, the appointment of a new CFO who may provide more prudent guidance, and reasonable expectations for the applications business in fiscal year 2027 (FY27).
To quantify the OCI upside, Piper Sandler used disclosed cost and revenue metrics from cloud‑infrastructure providers Crusoe and CoreWeave as benchmarks. The analysis assumes a baseline capex cost of roughly $46 million per megawatt and an infrastructure‑as‑a‑service (IaaS) revenue generation of about $13.5 million per megawatt. Applying these assumptions to Oracle’s projected FY27 capex, the firm estimated that Oracle could bring approximately 2,400 megawatts of new data‑center capacity online during the fiscal year.
Based on a gradual ramp‑up of this capacity throughout FY27, Piper Sandler calculated net new OCI revenue of about $23.0 bn, compared with its current internal estimate of $20.8 bn. This uplift lifts the total projected OCI revenue for FY27 to $41.1 bn. Fitzsimmons characterised the incremental contribution as a “12% tailwind to FY27 OCI growth.”
Oracle’s shares had retreated following the company’s fourth‑quarter results, a move Piper Sandler interpreted as creating an entry opportunity given the upside scenario supported by its analysis.