UBS analysts upgraded Oracle (NYSE:ORCL) to Buy from Neutral and increased their price target to $140.00 from $120.00. As a result, shares surged more than 2% pre-market today.

This shift stems from UBS’ strengthened belief that Oracle possesses an underappreciated advantage in terms of its Graphics Processing Unit (GPU) capacity and Oracle Cloud Infrastructure (OCI) architecture. The analysts anticipate this edge will attract new clients and drive greater utilization of OCI services.

According to the analysts, their investigations align with the idea that Oracle is enjoying substantial allocations of Nvidia GPUs compared to its size. They suggest a potential 6-12 month period of GPU shortage concerns lies ahead, and the conversion of $2 billion in AI start-up commitments to OCI usage hasn’t even occurred yet.

Despite Oracle’s stock already experiencing a 42% year-to-date surge, UBS believes that the ongoing GPU supply constraints might result in a sustained strong performance for Oracle shares.

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