We increase our 12-month target price to $256 from $215, utilizing a higher revised P/E of 32x and shifting to our FY 27 (May) EPS view, a premium to peers and well above ORCL's three- and five-year historical averages of 21.6x and 19.1x. Although we keep our estimates unchanged (FY 26 at $6.71 and FY 27 at $8.01), we see upside to our views as well as consensus given improving visibility as well as accelerating growth potential tied to the cloud and AI led by the company's IaaS segment. This week, CEO Safra Catz disclosed, in an SEC filing, a massive cloud services agreement that will contribute over $30B in annual revenue starting in FY 28. We also note ORCL cited that its Multi-Cloud database revenue continues to grow at a triple digit base, albeit in its early days but we believe represents the third major pillar of growth for the company (behind AI infrastructure build-outs and strategic SaaS). An expanded OpenAI/Stargate partnership also offers additional upside to forward estimates.

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