Investing.com -- JPMorgan on Wednesday upgraded Oracle to Overweight from Neutral following its latest earnings report, arguing the recent sell-off in the stock has improved the company’s risk-reward profile.

The bank set a $210 price target for December 2026, down from a prior $230, and said the recent "severe selloff improves risk/reward against a backdrop of thick investor pessimism."

Oracle shares are down about 55% since mid-September, compared with a roughly flat performance for the S&P 500 and Nasdaq over the same period.

Analyst Mark Murphy said the drop in sentiment has shifted investor expectations from optimism about the company’s long-term targets to “widespread pessimism,” creating a lower bar for future execution.

Murphy also pointed to Oracle’s recent $25 billion debt raise, which he believes reduces concerns around the company’s financing plans and removes the need for additional bond issuance in 2026.

Furthermore, recent results show “incremental proofpoints supporting the ability to accelerate top line rapidly and converge on growth territory while still growing Operating Income in the double-digits,” the analyst added.

Murphy stressed that the upgrade is not predicated on Oracle achieving its long-term financial targets, which call for a sharp acceleration in revenue growth. Instead, the analyst believes the stock can perform even under more moderate growth scenarios, particularly given the reset in investor expectations and valuation.

He also noted that Oracle now trades at a "growth-adjusted discount relative to hyperscaler peers," with the stock valued at roughly 18 times 2027 GAAP EBIT compared with around 20 times for companies such as Amazon, Microsoft and Google.

Oracle’s fiscal third-quarter results came in ahead of expectations on several key metrics. Total revenue rose 22% in U.S. dollar terms and 18% in constant currency, above consensus expectations, while pro-forma operating income reached $7.38 billion, also topping estimates.

While investors have focused on gross margin compression tied to AI infrastructure investment, Murphy said operating income growth remains the more relevant metric as Oracle scales its cloud and AI businesses.

Adjusted earnings per share were $1.79, ahead of the Street’s $1.70 forecast.

Growth was driven by cloud and AI infrastructure demand. Cloud revenue increased 43.5% year over year, while AI infrastructure revenue surged 243%. Multi-cloud database revenue also jumped 531% year over year.

Shares in the enterprise software giant jumped nearly 10% in premarket trading Wednesday after the results.

According to Murphy, Oracle’s growth drivers extend beyond AI data centers, pointing to continued cloud migration, multi-cloud adoption and database innovation as additional contributors to future expansion.

The company reiterated its fiscal 2026 outlook, expecting total revenue of about $67 billion and capital expenditure of around $50 billion. For the fourth quarter, Oracle guided for total revenue growth of 19% to 21% in U.S. dollar terms and projected adjusted earnings per share of $1.96 to $2.00.