The hit to shares of software giant Oracle (ORCL) from yesterday’s meltdown in the tech sector is likely overdone, according to at least one analyst covering the stock.
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ORCL fell almost 14% on Monday, January 27th, making it one of the worst hit stocks from the DeepSeek fallout, which saw sharp declines in a number of leading U.S. tech companies on fears that they may face sterner competition from China.
Oracle had been touted as part of the $500 billion Stargate project launched by President Trump last week. But the launch of the R1 AI model by DeepSeek, which came at a fraction of the cost of U.S. rivals like OpenAI, has upended assumptions about the level of investment required.
Evolution Not Revolution
Jefferies five-star analyst Brent Thill however was not overawed in the same way as some, echoing Wedbush analyst Dan Ives, who called it a “golden buying opportunity” to pick up some tech names.
DeepSeek’s release is “part of an ongoing evolution, not revolution”, and innovations which continue to drive increasing efficiency will further improve returns on AI investments, which will in turn lead to faster software adoption, he said.
Most hyperscalers, he continued, are expected to be capacity constrained with backlogs far exceeding that of its capex ramp.
Essentially, he thinks the market reaction on Oracle was overdone as core AI capacity demand has not changed.
Jefferies Maintains AI Outlook
Indeed, Jefferies maintained its existing views owning Microsoft (MSFT) and Amazon.com (AMZN) for enterprise, Meta Platforms (META) and Alphabet (GOOGL) for consumer, and Snowflake (SNOW) for a potential data and AI breakout play.” In addition, names like Dynatrace (DT) and Datadog (DDOG) should see broader adoption with the the spread of AI, says the firm.
Is ORCL a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on ORCL, based on 15 Buys, 11 Holds and one Sell. The average ORCL price target of $192.88 implies nearly 22% upside from the current level.
