Oracle Stock (NYSE:ORCL)
On Monday, Oracle stock continued its upward trend following the enterprise software company’s release of quarterly results that exceeded analysts’ expectations.
During after-hours trading, Oracle stock (NYSE:ORCL) gained 3.5%. During Monday’s regular trading session, the stock finished the day with a gain of 6.1%.
Prior to the announcement, investors were focused on the outlook for the company’s cloud business, which is benefiting from an uptick thanks to companies that generate artificial intelligence.
Oracle reported revenue of $13.8 billion for its fiscal fourth quarter, which ended on May 31. This represents an increase of 17% as reported and 18% in constant currency. Oracle anticipated a growth rate of 17% to 19% after accounting for currency fluctuations. The non-GAAP profit came in at $1.67 per share, which was a dime more than what was expected by Wall Street.
The results were driven by a growth in cloud-related revenue of 54%, or 55% in constant currency, which was well above the estimates of the Street, which were approximately 50%. Oracle had an earnings per share of $1.19 according to generally accepted accounting practices. Oracle stated that unfavorable exchange rates contributed to a reduction of three cents per share in non-GAAP profit.
Oracle reported that its cloud-infrastructure business brought in $1.4 billion in revenue during the quarter, an increase of 76% as reported or 77% after accounting for currency fluctuations. Revenue from cloud applications reached $3 billion, an increase of 45% or 47% when adjusted for currency exchange rates.
Oracle achieved a record-breaking level of revenue of $50 billion for the entire financial year, an increase of 18% as reported or 22% in constant currency terms. The company reported that the combined revenue of its cloud businesses had increased by 50% for the year when measured in the same currency. Oracle mentioned that the growth of its cloud infrastructure business in particular has been picking up speed.
Oracle has recently announced that it has signed contracts with more than 30 AI development companies, and these companies have collectively committed to purchasing more than $2 billion of capacity in Oracle’s Gen 2 cloud.
In recent weeks, shares of Oracle have been soaring on the back of an increasing belief that the company’s cloud business is well-positioned to benefit from the growing trend of artificial intelligence. The share price is currently at an all-time high, and it recently broke through the $300 billion mark in terms of market valuation. Oracle’s stock price has increased by more than 30 percent since March.
What has mostly changed is Oracle’s aggressive push into the cloud, first with its own software and then with the launch of Oracle Cloud, as noted by Barron’s in a cover story from February 2021 and reiterated in a story from last October that included an interview with CEO Safra Catz. First, Oracle launched its own software, and then it launched Oracle Cloud. Since then, the share price has increased by 70 percent.
Catz said at the time that customers who compared them to them were often shocked when they compared them to other clouds. “Why are all of these automobile manufacturers—Toyota, Nissan, and Mazda conducting all of their high-performance work in Oracle Cloud? Is it the endearing manner in which we treat our guests? Almost certainly not. Is it because it is quicker, more affordable, and more secure than other options? Ding, ding, ding!”
Oracle is becoming a surprisingly compelling AI play by capitalizing on its strong customer relationships, cutting-edge cloud platform, and close relationship with Nvidia (NASDAQ:NVDA), which supplies chips to almost every cloud vendor. This is all in an effort to become an industry leader in artificial intelligence. Oracle stated today that Nvidia themselves are utilizing a cluster that contains more than 4,000 GPUs.
The consensus among analysts on Wall Street anticipates revenue of $12.3 billion and an adjusted profit of $1.16 per share for the August quarter. On the upcoming conference call, Oracle will talk about the upcoming forecast.
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