Oracle, a renowned software company trading under the ticker ORCL, is set to unveil its quarterly earnings report later than usual on Monday. Despite facing a downturn in its investment performance, Oracle has a chance to showcase its prowess in artificial intelligence through its upcoming third-quarter report.
The stock of Oracle has witnessed a 9% decline from its peak six months ago, hovering close to 130 per share that was achieved in September last year. However, there has been a resurgence in the company’s performance during the first quarter of 2023.
Analysts have reevaluated their outlook on this 46-year-old establishment, focusing on its potential to expand its range of cloud services, particularly in the realm of Artificial Intelligence products. Despite facing setbacks due to disappointing financial results in recent times, Oracle’s trajectory is closely aligned with the S&P 500’s 29% surge over the past 12 weeks.
Key Highlights to Watch Out for in Oracle’s Monday Statement:
Key Financial Metrics
Market analysts, as per FactSet estimates, project a 13% rise in Oracle’s earnings to \(1.38 per share and a 7% increase in sales to \)3.3 billion.
The most substantial growth is expected in Oracle’s cloud services and license support segment, encompassing its software subscription offerings, with sales forecasted to surge by 11.4% to $9.9 billion, as per FactSet data.
Furthermore, Wall Street experts anticipate a 14% uptick in Oracle’s net income to reach $3.87 billion for the quarter.
Oracle’s Cloud Progress
The development of Oracle’s Cloud Infrastructure division will be under close scrutiny, given that a significant portion of Oracle’s AI portfolio is hosted on OCI. Oracle’s founder, Larry Ellison, has emphasized the transformative impact of AI on technology investments, particularly in the cloud domain.
Despite the optimism surrounding OCI, Oracle faced a setback post its December earnings report, primarily due to a slowdown in revenue growth within its Cloud Infrastructure business for the second consecutive quarter.
While OCI continues to outpace its competitors like Amazon, Microsoft, and Google in growth rate, Oracle is striving to bridge the gap. Recent industry reports suggest that Oracle commands less than 5% of the cloud market share, with Amazon leading at 31%, followed by Microsoft at 24%, and Google at 11%.
Oracle Stock: Capital Expenditure Focus
Barclays analyst Raimo Lenschow highlighted the significance of monitoring Oracle’s CapEx figures in the upcoming report. Oracle’s emphasis on expanding its AI-related cloud business has necessitated substantial capital investments, with challenges including the procurement of high-performance computing chips.
Despite a lower-than-expected investment of \(2.4 billion in the initial six months, Oracle remains committed to its guidance of \)8 billion in capital expenditures for the fiscal year ending in May. This strategic move aims to bolster the company’s cloud and AI capabilities in the foreseeable future.
Technical Analysis Insights for Oracle Stock
From a technical perspective, Oracle boasts a Composite Rating of 71 out of 99, indicating its strong performance in fundamental and technical stock selection criteria, outperforming 70% of all companies.
Moreover, Oracle’s relative strength rating stands at 53 out of 99, showcasing its value performance over the past year compared to its peers. The company also holds a C Accumulation/Distribution Rating, reflecting a balance between institutional buying and selling activities over the previous 13 weeks.
In conclusion, Oracle’s upcoming earnings report presents a crucial juncture for investors and analysts to gauge the company’s financial health, cloud advancements, and strategic investments in the AI domain.
