Oracle's trio of partnerships with top cloud services providers Amazon, Microsoft and Google parent Alphabet could help power a major "cloud migration story" with wider stock implications, an analyst said Wednesday.
"Over the last year, Oracle in our view has made a key pivot, enabling large database customers to run Oracle databases in Microsoft Azure, Google Cloud and now (Amazon Web Services), the underpinnings of a new 'run anywhere' strategy that customers have long been asking for," UBS analyst Karl Keirstead wrote to clients Wednesday.
"The database cloud migration process has not yet kicked-off and in our view most investors have yet to wrap their arms around the potential boost to Oracle, the impact on Microsoft and even the long-tail impact on MongoDB."
Shares of Oracle surged to record highs earlier this month, following a strong earnings report and the announcement of its partnership with Amazon Web Services. Customers will be able to run Oracle's database technology on dedicated hardware in AWS data centers. Oracle reached similar deals reached with Google in June and late last year with Microsoft.
Oracle Stock: Powering A Major Cloud Migration?
Early feedback on Oracle's first partnership, Database@Azure, is positive, Keirstead wrote. Based off checks within the industry, the cloud deals could unlock opportunities for both Oracle and its partners, he added.
"Oracle databases underpin some of the most valuable and resource-intensive IT workloads and we estimate that perhaps 80%+ are deployed on-premise," he wrote. "If the cloud deals unlock a material migration opportunity, Oracle databases could emerge as one of the next major cloud migration stories and drive a major workload migration for Microsoft Azure."
For Oracle, the deals could help continue its strong run of cloud infrastructure growth. It could also help the company defend what UBS estimates is a $20 billion annual database business. Even with Oracle stock up nearly 60% this year, Keirstead said the cloud database migration is opportunity is not yet "fully baked into" Oracle's value. He added, however, that the uplift to Oracle from the deals will likely be seen during fiscal year 2026 at the earlier. Oracle's current fiscal 2025 began with June.
With the report, UBS reiterated a buy rating and 200 price target for Oracle stock, representing roughly 20% upside. UBS also named Oracle a top pick in a report earlier this month.
Opportunity For Microsoft?
Beyond Oracle, the deals are seen as a growth opportunity for the cloud providers. The positives could extend beyond hosting Oracle's database workloads. Microsoft, for instance, could benefit from the "post-migration upsell of AI and other native Azure services," Keirstead wrote.
On the other hand, Oracle's strategy also bears watching for MongoDB stock, UBS noted. MongoDB has historically benefited from enterprises moving away from legacy Oracle databases. However, Keirstead estimated that such moves are a "small contribution" to MongoDB's overall revenue.
"Bottom line, the Microsoft, Google and now AWS database deals could be the beginning of a major pivot for Oracle, from a 'closed ecosystem' to an 'open ecosystem,'" Keirstead wrote. "This could represent a major revenue 'unlock' for Oracle and a major catalyst for the cloud infrastructure space more broadly."
Oracle Stock Extended Past Buy Point
On the stock market today, Oracle stock is up nearly 1% at 167.32 in late morning trades. Shares are extended beyond a flat base pattern buy point of 146.59, as identified by MarketSurge pattern recognition.
Oracle broke out beyond that buy point following its fiscal first quarter earnings report on Sept. 9.
Meanwhile, Oracle stock has an IBD Composite Rating of 91 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
