This article first appeared on GuruFocus.

Deutsche Bank says the investor bear case on Oracle (NYSE:ORCL), driven by heavy AI spending and leasing obligations, could actually signal hidden upside for the stock, analyst Brad Zelnick wrote in a note to clients.

Zelnick models a scenario that trims about $4 from consensus EPS to roughly $17 and trims free cash flow by about $10 billion to near $31 billion, assuming Oracle's guidance excludes OpenAI-related activity. Discounted to present value, he argues those conservative assumptions imply the market is not fully crediting Oracle's AI backlog at today's roughly $200 share price.

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The analyst, who keeps a Buy rating and a $375 price target, warned lease costs could pressure results in a downside case, lowering EPS to about $15 and FCF to near $26 billion, but said there is flexibility in those obligations that may limit damage to the business.

Zelnick added that Oracle's current valuation, near 27 times consensus calendar-2026 EPS, already prices in significant near-term scaling costs. He said the OpenAI relationship and Oracle's AI infrastructure work could drive above-consensus returns if execution and backlog materialize.