Jun 13, 2023

Oracle (ORCL) shares surged ahead of its Monday release of earnings.

ORCL – Weekly Chart

ORCL – Weekly Chart

The price of ORCL jumped to a new all-time high on Monday above $116. Traders should be on the lookout for a potential top after the release. 

Despite a record-high stock price, Oracle is currently valued at a price-earnings ratio of 36X, with a forward balance of 19X. That is not too expensive if the company can continue to show growth. 

Wolfe Research’s Alex Zukin has upgraded Oracle’s stock to outperform with a $130 price target as he sees it benefiting from the AI buzz. He believes the Oracle Cloud Infrastructure (OCI) business could double its market share by 2025 “on the backs of architectural advantages, partnerships,” and tailwinds related to AI. 

“Rather we see the potential for a solid fourth-quarter report coupled with AI narrative tailwinds to drive a narrative re-rating from today’s high-teens [earnings per share] multiple to somewhere closer to the mid-20’s,” he wrote. 

“Aside from cost-driven share gains, OCI also has the one thing that every AI startup is asking for today, spare GPU capacity,” he wrote. “Similar to getting those first cloud workloads during Covid, sometimes timing is everything.” 

Investors will be watching closely for gains in the cloud business of Oracle which could add further gains to the stock. 

Revenues in the most recent quarter saw an increase of $10.5 billion to $12.4 billion year-on-year.

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