Oracle just reported the loudest cloud quarter in enterprise software history, yet the stock keeps sliding. Here is why that disconnect may be the most asymmetric setup in the market right now.
We believe Oracle to be undervalued due to overblown credit market fears regarding its capex and AI-related exposure. We point to a rising RPO balance, and accelerating deferred revenue and recognized revenue growth as indicating upside surprise potential in the stock. We rate ORCL at Accumulate between $134 and $198, and Hold between $198 and $250, with a $250 initial price target and a proposed stop below $134.
Oracle just delivered a blowout quarter and its shares cratered anyway, but a handful of Wall Street analysts are calling the selloff the opportunity of the year with a price target that would nearly triple your money.
ORCL tops Q1 estimates as AI cloud demand accelerates, with revenues and backlog surging despite heavy infrastructure spending.
Oracle delivered the right results at the wrong time; a hawkish CPI print, coupled with odds of a Fed hike, is not compelling for a stock with a 1.9 beta. Leaving aside the short-term noise, the Q1 print was better than what I initially anticipated. OCI growth hit 121%, above the Street's consensus. Customer prepayments reached $11.36 billion. I think that materially changes how investors should read Oracle's operating cash flow and funding needs.
Oracle stock (NYSE: ORCL) extended its decline for a fifth consecutive trading session on Tuesday, as investors have been weighing renewed concerns about the artificial-intelligence spending cycle, higher borrowing costs and the cloud company's close ties to OpenAI. Shares fell 3.1% on Tuesday, taking their five-session decline to more than 14%.
Chip stocks linked to OpenAI rebounded a bit on Tuesday, but Oracle shares extended their losses.
Oracle doesn't want employees "doing more with less," its CFO said in an all-hands meeting on Tuesday. The remarks came a day after Oracle began a new round of layoffs.
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Oracle just posted record AI bookings and cloud growth that should have sent shares soaring, yet the stock sits near a 52-week low.