Is the AI cloud business severely undervalued? Wells Fargo: The market is overly pessimistic, and Oracle has a 50% upside potential

Wallstreetcn
2025.12.22 13:50
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Wells Fargo's report indicates that with strong potential in AI cloud infrastructure, Oracle's stock price has nearly 50% upside potential, with a target price of up to $285. The bank emphasizes that Oracle's undervalued exposure to AI cloud business will be the core driver supporting its bullish stock price. Analysts point out that if the application of AI accelerates, it will mean significant rebound opportunities for the stock

Wells Fargo believes that the current pessimism in the market surrounding artificial intelligence (AI) investments is "overdone," and the severely undervalued Oracle is facing a significant opportunity for value reassessment.

On Monday (December 22), according to CNBC, Wells Fargo released a latest report indicating that with the strong potential of its AI cloud infrastructure, Oracle's stock price implies nearly a 50% upside.

This optimistic outlook comes amid severe volatility in the tech sector, with growing concerns about overvaluation of AI-driven companies and slowing growth. Wells Fargo's report emphasizes that Oracle's exposure to its undervalued AI cloud business will be the core driver supporting its bullish stock price.

As of December 21, 2025, Oracle's stock price closed at around $190. Wells Fargo's latest estimate suggests a potential target price of $285.

Analysts point out that if the application of AI accelerates, it would mean that the stock faces significant rebound opportunities, contrasting sharply with the prevailing cautious sentiment in the current market.

Pessimism in AI "Overdone" and Undervalued Cloud Assets

Wells Fargo elaborated on the bullish logic in its analysis, with the core view being that Oracle's robust cloud infrastructure and AI integration are undervalued assets in the market.

According to the report cited by CNBC, Oracle's recent expansion in AI data centers and partnerships has positioned it favorably in the competition against its rivals.

Analysts believe that the current market's pessimism in the AI sector mainly stems from scrutiny of the high valuations of tech giants, but this obscures the actual growth potential of companies like Oracle.

Wells Fargo's viewpoint challenges this mainstream narrative, arguing that as Oracle's proprietary database technology captures more market share, its fundamentals are stronger than market expectations. The report states:

Global AI investment is expected to reach $200 billion by 2025, and Oracle is poised to benefit from this through its technological layout, with this fundamental improvement not yet fully reflected in its stock price

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