Oracle Stock Jumps On Earnings Beat, AI Demand For Cloud Business – Investor’s Business Daily

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Database software giant Oracle (ORCL) on Monday posted better-than-expected quarterly earnings, with sales that hit the mark expected by analysts. Oracle stock jumped as the company said artificial intelligence is boosting demand for its cloud-computing business.

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Oracle reported Monday that it earned an adjusted $1.41 per share on sales of $13.28 billion for it February-ending quarter. On average, analysts projected the Austin, Texas-based company would post adjusted earnings of $1.38 per share on sales of $13.28 billion, according to FactSet.

Adjusted earnings increased 16% year over year while sales increased 7% for the company’s fiscal 2024 third quarter.

On the stock market today, Oracle stock is up more than 9% at 125.05 in after-hours action.

Cloud Backlog Grows

In a news release, Oracle Chief Executive Safra Catz touted a growing backlog for the company’s cloud-related services. The firm’s remaining performance obligations grew 29% in the quarter, totaling more than $80 billion in backlogged work. Catz said that is an all-time record for the company.

Oracle cloud infrastructure revenue increased 49% year over year to $1.9 billion for the February quarter, the company said. That marked a stabilization for the business. Sales grew 52% year over year in its November quarter, 66% in the firm’s August quarter and 76% in the May quarter.

The cloud infrastructure business competes against Amazon Web Services and Microsoft Azure to rent computing power and storage to enterprises. Analysts see the offering as a potential growth driver for Oracle as companies adopt generative AI tools, which require massive data and computing power. But Oracle’s stock took a hit late last year as sales growth for the cloud infrastructure business slowed in back-to-back quarters.

But the company said demand is strong. Catz touted “large new cloud infrastructure” contracts added by Oracle during the most recent quarter as proof.

“We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly,” Catz said in a news release.

The firm expects that 43% of the $80 billion in performance obligations will be recognized as revenue over the next 12 months.

Oracle Stock: Technical Ratings

Prior to earnings, Oracle gained 1.5% in Monday trading to close at 114.12. Shares have advanced 10% this year and are up 34% over the past 12 months. But Oracle stock slumped following its two earnings reports prior to Monday. That left shares about 10% below a six-month high around 130 that it reached in September, as of Monday’s close.

Meanwhile, IBD Stock Checkup shows that Oracle has a so-so Composite Rating of 69 out of a best-possible 99, heading into its earnings report. The rating means Oracle stock currently outperforms 69% of all stocks based on fundamental and technical stock-picking criteria.

In addition, shares have a Relative Strength Rating of just 50 out of 99. The RS score measures how a stock’s price performance over the last 52 weeks holds up against other stocks in IBD’s database.

Oracle shares have formed a consolidation pattern over the past 38 weeks, according to IBD MarketSurge charts. The pattern shows a 127.54 buy point.


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