Oracle (ORCL) stock was slightly lower in trading Monday, with a big earnings report due later in the day. Shares of the 47-year-old database software giant surged by more than 80% this year as Wall Street bets on Oracle as an AI winner.
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The company will be looking to keep its winning streak going. Its rally this year has been powered by three straight earnings reports that beat expectations that boosted the stock by double digit percentages the next day each time. That includes a 14% gain after its last report in September.
The bar has now been raised, however, for Oracle’s fiscal second quarter report. Here’s what to watch:
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The report from Oracle will cover its November-ended quarter. Analysts are expecting adjusted earnings to grow 11% to $1.48 per share, according to FactSet. Sales are projected to grow 9% to $14.1 billion.
Investors will be scrutinizing the results for the company’s Oracle Cloud Infrastructure business. Helped by AI startups renting computing power, OCI has grown quickly in recent quarters and emerged as a fourth enterprise cloud option, chasing the much-larger hyperscalers Amazon.com (AMZN), Microsoft (MSFT) and Google (GOOGL).
Jefferies analyst Brent Thill wrote late last week that investors are looking for 52% growth for Oracle’s cloud infrastructure business in the quarter, accelerating from 45% growth in Oracle’s previous earnings report. Expectations for Oracle overall are “elevated after the bullish analyst day in September,” Thill wrote. He rates Oracle stock a buy.
Oracle’s guidance for overall revenue growth could also move the stock. Analysts are projecting sales of $14.6 billion for the February-ending quarter, representing 10% year-over-year growth.
Barclays analyst Raimo Lenschow, who is bullish on Oracle, said in a recent client note that investors want to see a “continuation of the revenue acceleration story, but also Q3 guidance that supports the double-digit (fiscal year) 2025 revenue growth target.”
Meanwhile, Evercore ISI analyst Kirk Materne said investors will be listening for commentary on the backlog for the cloud business, as well as for commentary around generative AI clients.
“Any major GenAI wins, and the value of those contracts, could help reinforce the continuing narrative that Oracle is a winner in the GenAI race due to cost efficiencies,” Materne wrote Friday. Materne holds an outperform call on Oracle stock.
Oracle Stock: 94 Composite Rating
On the stock market today, Oracle stock was down a fraction at 190.93 in morning trades. Shares are ahead 83% overall this year, which puts Oracle stock on pace for its best year since 1999.
Oracle stock added 3% last week and it is finding support near its 21-day moving average in Monday trading.
Meanwhile, Oracle stock has an IBD Composite Rating of 94 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Oracle’s IBD Relative Strength Rating is 92 out of 99. The RS Rating means that Oracle has outperformed 92% of all stocks over the past year.
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