As the world eagerly awaits Oracle’s quarterly results, the focus is on the tech giant’s lesser-known artificial intelligence (AI) capabilities. Wall Street analysts predict that Oracle will earn $1.15 per share on $12.47 billion in revenue for its fiscal Q1 2024, marking substantial growth in EPS and topline. With Oracle’s stock already experiencing a 50% surge this year, many anticipate that the company’s AI offerings will further propel its success.
Although Oracle is often seen as a legacy tech firm, industry expert Jim Cramer believes that the company’s transformation has positioned it as a rising star in the AI arena. By establishing a strong relationship with Nvidia, the leading AI chip manufacturer, Oracle’s Cloud Infrastructure (OCI) has emerged as an attractive platform for organizations exploring AI technologies. Notably, Oracle’s cloud-computing business, while smaller than competitors like Amazon Web Services (AWS) and Microsoft’s Azure, has experienced substantial growth. In the three months ending May 31, OCI’s revenue surged by an impressive 76% year-on-year, contributing approximately 10% to Oracle’s total revenue.
As Oracle prepares to unveil its Q1 results, Barclays highlights the significance of OCI’s performance, as well as management’s commentary on future AI opportunities. The analysts believe that OCI is likely to exceed expectations, potentially driving post-earnings trading. Consequently, Barclays upgraded Oracle’s rating to a buy-equivalent and raised the price target on the stock to $150 per share.
UBS, another reputable firm, has also expressed optimism about Oracle’s AI prospects. They contend that Oracle’s access to Nvidia’s cutting-edge graphics processing units (GPUs), coupled with OCI’s efficient architecture for GPU clusters, has given the company an edge. Analysts at UBS maintain a positive outlook, recently upgrading Oracle stock to buy and increasing the price target to $140 per share.
While Oracle’s AI-linked revenue currently represents a small fraction of its overall revenue, experts argue that the potential for growth is significant. Analysts’ ratings on Oracle still lag behind other top tech companies in the AI field, such as Nvidia and Microsoft, suggesting untapped potential for Oracle. With a relatively modest valuation compared to its peers, Oracle is considered reasonably priced and holds promising appeal for potential investors.
In conclusion, as Oracle’s earnings report looms, anticipation is high regarding the company’s AI capabilities. With strong growth in OCI and favorable partnerships, Oracle is well-positioned to leverage AI technologies and attract further investor interest.