IBD stock analysis
- After years of sluggishness, the stock hit an all-time high of 127.54 on June 15
- The shares pulled back a couple of weeks before bouncing back to the 21-day line
- The relative strength score is 95 out of 99; The composite rating is 93
Industry group ranking
* Data not in real time. All data shown was acquired as of 1:44 PM EDT on 6/30/2023.
Oracle is the day’s IBD stock amid a bullish bounce from its 21-day EMA. ORCL stock hit a record high in mid-June as investors focused on the potential growth of AI workloads running on its cloud computing network.
Oracle’s multi-year corporate restructuring has moved the database software giant firmly into cloud computing. Additionally, Oracle bought healthcare giant Cerner in 2022, continuing a series of acquisitions spanning decades. In 2016, Oracle acquired NetSuite for $9.3 billion. NetSuite sells cloud-based enterprise resource planning software.
In today’s stock market, ORCL stock was up 1.1% to 119.09. Oracle is up 46% in 2023, with shares hitting an all-time high of 127.54 on June 15. Also, after pulling back for a couple of weeks, ORCL stock has bounced off its 21-day line, offering an alternative entry around 115.
Additionally, Oracle shares have been added to IBD’s SwingTrader platform.
ORCL action: management promotes artificial intelligence
In reporting its fiscal fourth-quarter earnings on June 12, Oracle’s management touted potential growth in its cloud business due to corporate adoption of generative AI.
“Management has championed the role of Oracle Cloud Infrastructure (OCI) in the context of generative AI workloads as the company sees success on several fronts,” said Morgan Stanley analyst Keith Weiss in a statement. to customers.
Furthermore, he added: “That is, Nvidia (NVDA) uses OCI to build a high-performance computer and serve customers in specialized fields. Additionally, Oracle is beginning to offer customers Generative AI services trained on their own private data, culminating in $2 billion worth of AI contracts signed in the past two quarters.”
Chip maker Nvidia is among the AI stocks to watch.
Access to “Big Data” is critical to business adoption of Generative AI. Oracle has partnered with startup Cohere, which has been developing large language models, or LLMs, to train AI models.
Generative AI technology is already finding applications in internet research, marketing, advertising, drug development, video games, customer service and digital art. Generative AI creates text and images based on patterns in your training data.
AI tools integrated into the HR platform
Oracle on June 29 announced that it has incorporated new generative AI capabilities into its HR platform to improve employee productivity and experiences.
“Leveraging the LLMs, Oracle Fusion customers will be able to create content such as career advice or performance goals with short prompts, apply generated suggestions for things like survey questions or personal development tips, and quickly summarize key content elements Deutsche Bank analyst Brad Zelnick said in a report. He noted that Oracle currently won’t charge customers additional fees for new AI tools, unlike MicrosoftThe AI marketing approach of (MSFT).
Oracle faces competition in AI database services from cloud software startups like Snowflake (SNOW) and privately owned databricks. In recent years, Oracle has transitioned from being an on-premises legacy database software provider to a subscription-based software model that takes advantage of cloud computing.
In fiscal 2024, analysts estimate earnings growth of nearly 10% to $5.62 per share for ORCL stock. Revenue is expected to grow 8% to $54.02 billion.
A report from Jefferies says that as of the end of fiscal 2023, May 31, Oracle had $91 billion in debt and $10 billion in cash and cash equivalents on its balance sheet. A year earlier, it had just $76 billion in debt and $22 billion in cash
With a large debt load, Oracle scaled back its quarterly repurchases of ORCL stock, which boosted earnings. But Oracle still had $8.2 billion remaining in its share repurchase authorization at the end of May.
The jury is still out on Oracle’s $28 billion acquisition of Cerner. Cerner contributed a total of $5.9 billion in revenue in fiscal 2023, down 1% from the prior fiscal year. Additionally, Cerner has put pressure on profit margins.
The IBD Stock Checkup tool shows that Oracle has a Composite Rating of 93 out of a possible 99. The rating indicates that Oracle stock currently outperforms 93% of all stocks in fundamental and technical stock selection criteria.
ORCL stock has a Relative Strength Rating of 95. The rating shows how a stock’s price performance over the past 52 weeks holds up against all other stocks in the IBD database.
In addition, Oracle has an accumulation/distribution rating of B. This rating analyzes a stock’s price and volume changes over the past 13 trading weeks. A grade of A signals heavy institutional buying.
Follow Reinhardt Krause on Twitter@reinhardtk_techfor updates on 5G wireless, artificial intelligence, cybersecurity, and cloud computing.
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