Oracle Stock Soars 11.44% to New High on Stellar Earnings and Cloud Growth
2min read Oracle Corporation (NYSE: ORCL) saw its stock price surge by 11.44%, reaching an intraday high and setting a new all-time peak. This rise comes after Oracle announced its latest quarterly earnings, which exceeded market expectations.
Oracle's Q1 revenue increased by 7% year-over-year to $13.3 billion, surpassing analysts' forecasts of $13.23 billion. The cloud infrastructure segment, a rapidly growing area for Oracle, saw a 45% increase in revenue to $2.2 billion, slightly above the anticipated $2.18 billion. Additionally, the company reported non-GAAP net income of $4 billion, up 18%, while its GAAP net income stood at $2.9 billion.
The company’s recent milestone is its multi-cloud agreement with Amazon Web Services (AWS). Oracle’s latest Exadata hardware and the database software version 23ai will be integrated into AWS’ cloud data centers, enabling AWS customers to access Oracle’s databases seamlessly starting this December.
Despite not being the largest cloud service provider, Oracle's recent quarters have shown rapid growth in its cloud infrastructure business due to increasing AI demand. The company is expanding capacity and fostering partnerships with other major tech firms to capture a larger market share.
Oracle, often seen as a "follower" in the cloud service domain dominated by Amazon, Microsoft, and Google, has traditionally been valued lower by investors. However, analysts believe Oracle's recent Q1 performance might shift this perception.
Analysts from Mizuho Securities, such as Jordan Klein, noted, "The market is not entirely convinced of Oracle's long-term capabilities in AI, but consistent strong quarterly results could persuade more investors." The company’s steady performance in its cloud division could contribute to overall growth, positively impacting its valuation.
Oracle has projected sequential revenue growth for every quarter this fiscal year, with cloud infrastructure revenue expected to increase by over 50%. Its collaborations include significant contracts with OpenAI, which trains ChatGPT on Oracle's cloud platform, and partnerships with Microsoft and Google for multi-cloud connectivity.
Guggenheim recently labeled Oracle as its "top pick," pointing out its sustained growth even in typically slow seasons. Piper Sandler ranks Oracle alongside the "Big Four" of cloud computing—Amazon, Microsoft, and Google—predicting OCI's scale could grow tenfold by 2032.
Amid mixed performance from tech companies this earnings season, Oracle’s strong cloud demand highlights the ongoing influence of AI on cloud services. While Amazon's and Microsoft’s cloud businesses also reported significant contributions from AI, Oracle stands out for its robust growth potential.
Behind this optimism, Oracle has not yet achieved the almost unanimous buy ratings seen with Amazon and Microsoft among analysts tracked by Bloomberg. Currently, less than 60% recommend buying Oracle's stock, and the average target price indicates limited upside potential.
Nonetheless, advocates argue that Oracle's strong demand and significant growth capacity are underrecognized. As Ted Mortonson of Baird stated, "Many investors haven't included Oracle in their portfolios, but its current performance justifies at least equal weighting, if not positioning it as a core holding."