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Oracle (ORCL): From Dot-Com Relic to AI Powerhouse
Oracle: An Overlooked AI Leader, Until Now
Since the dot com bubble burst in 2000, Wall Street investors have mostly written Oracle ((ORCL - Free Report) ) off as a “has been.” For much of the 2000s and 2010s, these investors were correct in doing so. Throughout this time, Oracle shares largely oscillated in a frustrating range for much of the past two decades as earnings growth came to a screeching halt. Meanwhile, although Oracle’s co-founder and CEO Larry Ellison lives an eccentric and extravagant lifestyle (he bought the Hawaiian island of Lanai with his massive fortune), he is primarily out of the media spotlight, especially compared to his friend and Tesla ((TSLA - Free Report) ) CEO Elon Musk and other prominent big tech executives like Meta Platforms ((META - Free Report) ) Mark Zuckerbeg.
Oracle Business Overview
Oracle’s first and most well-known product is its “Oracle Database” management system. The Oracle Database is akin to a storage and control center for companies, aggregating massive quantities of financial data, inventory records, and customer information. Additionally, Oracle operates a legacy software business that involves maintenance contracts for its database software. Oracle’s legacy business remains stable and is a high-margin business. That said, what moves a stock is growth.
Oracle: From Dot Com Relic to AI Growth Engine
Oracle’s cloud services business is the primary driver of the stock and the company’s earnings growth. Oracle broke into the cloud business roughly a decade ago and has transformed into a formidable competitor to Amazon ((AMZN - Free Report) ) Web Services and Microsoft ((MSFT - Free Report) ) Azure. Through “Oracle Cloud Infrastructure,” Oracle can participate in the AI revolution. Oracle is unique in the AI industry because it offers a “full-stack” approach. ORCL acquires the highly sought-after graphics processing units (GPUs) necessary to run AI workloads from Nvidia ((NVDA - Free Report) ) and provides them to its cloud customers. As part of its one stop shop offering, Oracle seamlessly onboards customers to its cloud, providing the necessary infrastructure, models, and support to build and deploy AI.
ORCL Delivers the Earnings Report of the Year
Oracle’s recent earnings report underscores how Wall Street investors look to the future. Initially, the ORCL shares dropped after the company slightly missed revenue and EPS expectations. However, the forward guidance sent shares 35% higher overnight, equating to a single-day market cap gain of $244 billion and making Larry Ellison the wealthiest man on Earth.
Highlights of the guidance include:
· A Massive Backlog: Remaining Performance Obligations (RPO) represents contracts that are in backlog. In one of the most impressive guides ever, Oracle announced that RPO exploded to $455 billion, marking a mind-boggling 359% year-over-year increase.
Image Source: Fiscal.ai
· Four, Billion Dollar Deals: ORCL signed four billion-dollar + contracts with XAI, META, NVDA, and OpenAI.
· Multi-Cloud Business Soars: Oracle’s multi-cloud business offers a more flexible approach, enabling customers to work across cloud providers. In other words, clients can use Oracle’s database without the need to get rid of existing applications. The MC segment grew at an astonishing 1,529% for the quarter!
Can Oracle Live Up to its Own Expectations?
Oracle’s projected growth is so staggering that a concern of ORCL skeptics is that the company will fall short of its own expectations. To get a better idea of whether this is true or not, investors should look at the company’s EPS surprise history. When doing this, it turns out that Ellison and his team have proven to be conservative in their expectations. ORCL has bested Zacks Consensus Analyst Estimates in 15 of the past 20 quarters. Meanwhile, the largest earnings miss has been a mere 3.74% below analyst expectations.
Image Source: Zacks Investment Research
Oracle Technical Analysis
While many investors do not like “chasing” price gaps, history shows that it is the exact correct course of action when there is a fundamental catalyst of considerable magnitude. ORCL shares jumped 35% following earnings as volume swelled to 8x the norm. The $43 billion in dollar volume traded illustrates that institutional investors are tripping over themselves to get into the stock and establish positions. This phenomenon that typically lasts for months or years.
Image Source: TradingView
Bottom Line Oracle’s recent earnings report has undeniably shifted the narrative around the stock, proving that this long-overlooked company is a major player in the burgeoning AI revolution. With a massive and growing backlog, a unique full-stack cloud approach, and a proven track record of exceeding expectations, Oracle is no longer a “has-been.”
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Oracle (ORCL): From Dot-Com Relic to AI Powerhouse
Oracle: An Overlooked AI Leader, Until Now
Since the dot com bubble burst in 2000, Wall Street investors have mostly written Oracle ((ORCL - Free Report) ) off as a “has been.” For much of the 2000s and 2010s, these investors were correct in doing so. Throughout this time, Oracle shares largely oscillated in a frustrating range for much of the past two decades as earnings growth came to a screeching halt. Meanwhile, although Oracle’s co-founder and CEO Larry Ellison lives an eccentric and extravagant lifestyle (he bought the Hawaiian island of Lanai with his massive fortune), he is primarily out of the media spotlight, especially compared to his friend and Tesla ((TSLA - Free Report) ) CEO Elon Musk and other prominent big tech executives like Meta Platforms ((META - Free Report) ) Mark Zuckerbeg.
Oracle Business Overview
Oracle’s first and most well-known product is its “Oracle Database” management system. The Oracle Database is akin to a storage and control center for companies, aggregating massive quantities of financial data, inventory records, and customer information. Additionally, Oracle operates a legacy software business that involves maintenance contracts for its database software. Oracle’s legacy business remains stable and is a high-margin business. That said, what moves a stock is growth.
Oracle: From Dot Com Relic to AI Growth Engine
Oracle’s cloud services business is the primary driver of the stock and the company’s earnings growth. Oracle broke into the cloud business roughly a decade ago and has transformed into a formidable competitor to Amazon ((AMZN - Free Report) ) Web Services and Microsoft ((MSFT - Free Report) ) Azure. Through “Oracle Cloud Infrastructure,” Oracle can participate in the AI revolution. Oracle is unique in the AI industry because it offers a “full-stack” approach. ORCL acquires the highly sought-after graphics processing units (GPUs) necessary to run AI workloads from Nvidia ((NVDA - Free Report) ) and provides them to its cloud customers. As part of its one stop shop offering, Oracle seamlessly onboards customers to its cloud, providing the necessary infrastructure, models, and support to build and deploy AI.
ORCL Delivers the Earnings Report of the Year
Oracle’s recent earnings report underscores how Wall Street investors look to the future. Initially, the ORCL shares dropped after the company slightly missed revenue and EPS expectations. However, the forward guidance sent shares 35% higher overnight, equating to a single-day market cap gain of $244 billion and making Larry Ellison the wealthiest man on Earth.
Highlights of the guidance include:
· A Massive Backlog: Remaining Performance Obligations (RPO) represents contracts that are in backlog. In one of the most impressive guides ever, Oracle announced that RPO exploded to $455 billion, marking a mind-boggling 359% year-over-year increase.
Image Source: Fiscal.ai
· Four, Billion Dollar Deals: ORCL signed four billion-dollar + contracts with XAI, META, NVDA, and OpenAI.
· Multi-Cloud Business Soars: Oracle’s multi-cloud business offers a more flexible approach, enabling customers to work across cloud providers. In other words, clients can use Oracle’s database without the need to get rid of existing applications. The MC segment grew at an astonishing 1,529% for the quarter!
Can Oracle Live Up to its Own Expectations?
Oracle’s projected growth is so staggering that a concern of ORCL skeptics is that the company will fall short of its own expectations. To get a better idea of whether this is true or not, investors should look at the company’s EPS surprise history. When doing this, it turns out that Ellison and his team have proven to be conservative in their expectations. ORCL has bested Zacks Consensus Analyst Estimates in 15 of the past 20 quarters. Meanwhile, the largest earnings miss has been a mere 3.74% below analyst expectations.
Image Source: Zacks Investment Research
Oracle Technical Analysis
While many investors do not like “chasing” price gaps, history shows that it is the exact correct course of action when there is a fundamental catalyst of considerable magnitude. ORCL shares jumped 35% following earnings as volume swelled to 8x the norm. The $43 billion in dollar volume traded illustrates that institutional investors are tripping over themselves to get into the stock and establish positions. This phenomenon that typically lasts for months or years.
Image Source: TradingView
Bottom Line
Oracle’s recent earnings report has undeniably shifted the narrative around the stock, proving that this long-overlooked company is a major player in the burgeoning AI revolution. With a massive and growing backlog, a unique full-stack cloud approach, and a proven track record of exceeding expectations, Oracle is no longer a “has-been.”