Oracle stock had an excellent first quarter. Cloud infrastructure sales climbed 58% year over year, and cloud application revenue jumped 48%.
Larry Ellison, Oracle’s founder, and chairman, also revealed unexpected news. What investors should know.
Investors May Underestimate Its Cloud Business.
Oracle’s ERP software manages large enterprises’ accounting, project management, compliance, and supply chain operations. Oracle was late to the cloud revolution, yet it still dominates ERP.
Oracle stock has a decades-long lead in software over first-mover cloud providers. It’s the only cloud provider with infrastructure and ERP applications.
Oracle (NYSE:ORCL) has benefited from combining the two. MySQL HeatWave combines cloud services and an analytics database to handle consumer transactions. These two services were previously only available on different clouds, making data migration time-consuming. MySQL allows real-time transaction analysis.
MySQL HeatWave outperforms Amazon (NASDAQ:AMZN) and Snowflake (NYSE:SNOW) at half the cost. Amazon Web Services (AWS) users can now use the service.
Oracle (NYSE:ORCL) fixed costs may appeal to investors. Adding a new customer costs Oracle nothing, and each dollar of revenue yields more significant profit. Some customers start with a few Oracle software apps and add others later.
Oracle (NYSE:ORCL) may offer significant enterprise customers a discount for combining services, winning them on price and capability. Ellison is pleased about new consumers.
Ellison said Oracle can save cloud users money and offer a superior product to Amazon’s AWS. “Next quarter, we’ll announce certain brands and companies migrating from Amazon to OCI (Oracle Cloud Infrastructure) that will shock you,” he said.
Later, he said, “We’re talking to Amazon’s most famous companies, and some are moving soon.”
Oracle’s founder and chairman may be right when he gives a prophetic warning. Amazon’s AWS sector, which controls a third of the worldwide cloud infrastructure market, grew 33% last quarter. However, Oracle’s cloud infrastructure and cloud application revenue grew 58% and 48%, respectively.
Is Oracle Stock a Buy?
If Oracle stock is as competitive as it seems, it should earn an above-average share of the cloud computing market’s growth through 2028. Oracle stock has plummeted after the earnings release and now trades at $69 per share, despite its outstanding growth prospects. Oracle (NYSE:ORCL)is expected to earn $5.01 per share in the fiscal year ending May 31, 2023, which indicates a forward price-to-earnings ratio of 13.8 — its lowest in almost a year. Oracle’s valuation is 23 times the iShares S&P 500 Growth ETF (NYSEMKT: IVW).
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