Oracle Stock Surges After Strong Q4 Results and Cloud Partnership
Oracle Corporation witnessed a significant surge in its shares, closing up more than 13% on Wednesday. This spike comes on the heels of the software giant’s fourth-quarter earnings report, coupled with lucrative cloud deals with tech behemoths Microsoft-backed OpenAI and Google. This marked Oracle’s most robust trading day since December 10, 2021, showcasing investor confidence in the company’s recent developments.
The quarterly results revealed that Oracle raked in $14.29 billion in revenue, reflecting a 3% increase year over year. However, this figure fell slightly below analysts’ expectations of $14.55 billion, as reported by LSEG. Adjusted earnings per share stood at $1.63, a tad lower than the projected $1.65. Despite these minor deviations, Oracle disclosed an impressive $98 billion in remaining performance obligations (RPO) for the quarter, signifying anticipated revenues from forthcoming contractual commitments.
Oracle’s CEO, Safra Catz, attributed the robust financial performance to the surge in demand for Oracle’s cloud services, particularly for training artificial intelligence models. The strategic partnerships with Microsoft and OpenAI aim to bolster computing capabilities for the start-up, while Oracle’s decision to extend its database services to Google Cloud signals a strategic expansion into new markets. This strategic manoeuvre aligns with Oracle’s commitment to innovation and market diversification.
Financial analysts had mixed reactions to Oracle’s results, with Citi analysts highlighting the substantial RPO bookings growth that offset the revenue shortfall. UBS analysts commended Oracle’s remarkable sequential backlog growth of $18 billion, emphasising the narrative strength of the company’s AI initiatives. Despite acknowledging some missed metrics, UBS reiterated a buy rating on Oracle stock, underlining the positive sentiment surrounding Oracle’s AI narrative.
Morgan Stanley analysts echoed a similar sentiment, praising Oracle’s near-term focus on AI infrastructure development. While they raised questions about the nature of the contracts booked and potential gross margin impacts, they underscored Oracle’s positioning as a key player in the GenAI infrastructure landscape. The addition of prestigious clients like OpenAI is seen as a pivotal move that further solidifies Oracle’s standing in the tech industry, attracting investor interest and sustaining momentum in its shares.
