Oracle Corp. (NYSE:ORCL) is being left behind by a market that simply isn’t doing the math, according to one of Wall Street’s most bullish voices on the stock.

Guggenheim Securities senior managing director and software analyst John DiFucci appeared on Yahoo Finance Monday to make his case, calling Oracle “grossly undervalued” and reiterating his $400 price target — the highest on the Street, per Benzinga data. 

Contracted Backlog

DiFucci’s argument rests on a level of forward visibility he says is rare. 

Oracle has disclosed more about its future contracts and commitments than virtually any software company he covers, he said, and the market still hasn’t priced it in. 

The company’s remaining performance obligations (RPO) hit $553 billion in Q3, up 325% year-over-year. 

That’s not a pipeline. That’s contracted backlog.

Central to his thesis is OpenAI. DiFucci estimates the ChatGPT maker could eventually account for nearly 30% of Oracle’s total revenue — a staggering concentration for a single customer. 

He acknowledged the risk but noted it has been partially de-risked as OpenAI continues to secure outside funding, reducing concerns about its ability to pay.

The near-term picture is admittedly messy. Oracle is spending heavily — $50 billion in capex this fiscal year — to build out AI data centers, which has pushed trailing free cash flow deep into negative territory. 

But DiFucci sees that as a feature, not a bug. Gross margin compression from the buildout is a signal that substantial revenue is still waiting to come online once those facilities go live.

Cash Flow Waterfall

That’s where the “cash flow waterfall” comes in. 

DiFucci expects a sharp increase in free cash flow in 2029 and 2030 as contracted AI infrastructure revenue begins flowing at scale. 

"We think there is going to be a cash flow waterfall in fiscal 29, which will be really interesting when that happens," the analyst said. 

Crucially, he told Yahoo Finance the setup will start becoming visible to investors within the next year — not five years from now.

“People will realize, wow, this is amazing,” DiFucci said.

DiFucci has named Oracle his Best Idea for 2026. With ORCL shares still roughly 50% off their September 2025 highs, he’s not blinking on the $400 target.

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