Oracle stock got an intensive boost after the software company released its financial report for the fourth quarter of 2023. Interestingly, the Q4 results were worse than expected. Let’s explore what impressed market participants and why Oracle shares are trending this year.
First, let's examine the chart. It shows a massive spike after Oracle’s earnings report.
Since the beginning of 2024, Oracle's stock has become even more attractive, increasing by 35% in six months. This significant rise has also been flagged by the stock screener, highlighting Oracle as a top performer in the tech sector.
For comparison, these gains are double those of tech giants Apple and Microsoft (though Nvidia has outperformed everyone). Do you regret not having Oracle in your portfolio?
Now, let’s return to the financial report. Oracle’s earnings per share were $1.63, down from the forecasted $1.65. Revenue was also lower than estimated – $14.29 billion vs. $14.55 billion.
Typically, revenue and EPS are the key for market participants, but this time, they focused on more trendy aspects, particularly artificial intelligence. Oracle’s cloud infrastructure unit, which uses AI technologies, grew by 42% in the last quarter compared to the previous year.
Oracle officials are also sure that these stats will only increase in 2024. Additionally, Oracle’s cloud solutions are distinguished by their comparatively low prices.
Another fact delighting investors is Oracle’s new contract with Microsoft and OpenAI. Oracle’s Cloud Infrastructure will be used to extend the capacity for OpenAI, and the company has seen high demand for training AI language models in the Oracle Cloud.
Many analyst firms have adjusted their forecasts and raised their target prices. HSBC increased their target to $166 from $152, BofA Securities to $155 from $144, UBS to $160 from $150, and Bernstein to $171 from $159. However, among the firms that raised their forecasts, many target prices are still lower than the current price. Therefore, you should do your own analysis before making any trades.
