Oracle (WKN: 871460 / ISIN: US68389X1054) has now presented its results for the fourth quarter of the 2022/23 fiscal year. Above all, however, investors wanted to know what the cloud specialist will have to offer in the future in terms of artificial intelligence.
NVIDIA trusts Oracle
The initial reactions from the market were positive. Especially as chairman, company founder, CTO (Chief Technology Officer) and one of the richest people on the planet Larry Ellison said, “Oracle’s Gen2 Cloud has quickly become the number one choice for running generative AI workloads.”
The status of Oracle in this area is also shown by the fact that even the youngest AI darling of the markets, NVIDIA, relies on Oracle. “NVIDIA itself uses our clusters, including one with more than 4,000 GPUs, for its AI infrastructure.” , Ellison said. Accordingly, there were also some positive reactions from analysts.
Growing AI Opportunities
Barclays analyst Raimo Lenschow said the company’s Q4 report was the quarter “investors have been waiting for.” Cloud sales have increased, while management has better described the possibilities in the field of artificial intelligence.
Brad Zelnick, an analyst at Deutsche Bank, took the opportunity to raise the price target on Oracle stock to $135.00 from $120.00, while maintaining a “buy” rating. Recent results have been “strong” thanks to robust cloud demand. Zelnick describes it as particularly important that Oracle also wants to come up with a cloud growth rate of 30 percent in 2024.
Above expectations
Oracle had reported currency-adjusted sales growth for the past quarter compared to the previous year by 18 percent to 13.8 billion US dollars. Analysts had previously only expected the company to increase by 17.6 percent.
The operating margin was below expectations, but the adjusted earnings per share surprised on the upside. This was at $1.67 versus a consensus of $1.58. In addition, the management’s AI comments were pleasing.
Stock too expensive?
Bank of America analyst Brad Sills had already included Oracle in a list of AI winning stocks in the software space. In a ranking, Oracle even ended up in second place behind Microsoft. According to Sills, the company has integrated AI and machine learning into its core offerings.
However, the Oracle share has recently risen sharply. The valuation is already relatively high, so it currently only suffices for a “neutral” rating, while the price target was raised from $112.00 to $132.00 after the announcement of the latest quarterly results.
My conclusion
That a high-growth US tech stock isn’t exactly cheap is nothing new. Oracle seems to be among the beneficiaries of the AI trend.
Investors who are leveraged by increases in the share price of Oracle want to benefit, take a look Leverage Certificate (WKN: MB6PLC ISIN: DE000MB6PLC0) on the share certificates of the software company. Who as an investor, however, does not Oraclebut would rather focus on more direct beneficiaries of the expected boom in artificial intelligence, should that take hold Index certificate on the Artificial Intelligence Index (WKN: DA0ABV / ISIN: DE000DA0ABV8) look at.
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