Oracle stock makes new all-time high: Should you buy?

Oracle Corporation (NYSE:ORCL) has captured the market’s attention once again with a stellar performance. On June 11th, 2024, the company reported its Q4 2024 earnings after the market closed. Today, Oracle’s stock opened with gains of over 10%, reaching a new all-time high near $140. This remarkable leap was driven by strong bookings and forward-looking guidance, despite a slight miss in earnings and revenue estimates for the quarter.

Earnings report and key metrics

For the fourth quarter, Oracle reported adjusted earnings of $1.63 per share on $14.3 billion in revenue, falling short of analysts’ expectations of $1.65 per share on $14.57 billion in revenue. Despite these misses, the market responded positively due to Oracle’s robust performance in other areas, particularly its cloud infrastructure and artificial intelligence (AI) initiatives.

Oracle’s cloud revenue, which includes infrastructure and applications, grew to $5.3 billion. Infrastructure revenue alone soared by 42% year-over-year to $2 billion, highlighting the significant demand for Oracle’s cloud services. Additionally, the company secured $18 billion in remaining performance obligations this quarter, driven by 30 major AI-related deals amounting to $12.5 billion.

Strategic AI partnerships

A major highlight of Oracle’s recent activities is its strategic partnerships with leading AI companies. The agreement with OpenAI to use Oracle’s cloud infrastructure, alongside a multi-cloud partnership with Google, positions Oracle at the forefront of AI innovation.

These collaborations are expected to enhance Oracle’s credibility as a key player in the AI and cloud sectors, with potential to drive substantial revenue growth in the coming years.

Oracle CEO Safra Catz emphasized that the company’s robust sales contracts for AI model training in Oracle Cloud have significantly boosted performance. This trend is anticipated to continue, supporting Oracle’s goal of achieving double-digit revenue growth in fiscal 2025.

Analysts’ views and ratings

Wall Street analysts have responded positively to Oracle’s recent performance and strategic direction. Morgan Stanley’s Keith Weiss highlighted the positive impact of Oracle’s AI-related bookings, raising his price target on the stock to $125. Similarly, Evercore ISI’s Kirk Materne noted the growing strength of Oracle’s position in the public cloud market and raised his price target to $160 from $145 while keeping the ‘Outperform’ rating unchanged.

Other firms have also adjusted their ratings and price targets upwards. UBS Group, Piper Sandler, and KeyCorp all boosted their targets on June 12th, citing Oracle’s promising trajectory in cloud services and AI partnerships.

Business fundamentals and growth outlook

Oracle’s business fundamentals remain strong, driven by its expanding cloud infrastructure and applications services. The company’s ability to rapidly scale its data centers and enhance its cloud capabilities has been a key factor in its sustained growth.

Oracle’s management expects continued strong demand for AI solutions to propel further revenue and RPO growth. The company plans to double its capital spending in fiscal 2025 to support the expansion of its cloud infrastructure.

CEO Safra Catz has expressed confidence in the company’s ability to exceed its fiscal 2026 goals, citing the strong momentum in bookings and AI demand. This optimistic outlook is shared by many analysts who believe Oracle’s current growth trajectory may be underestimated.

Now, let’s see what the charts have to say about the stock’s price trajectory. With Oracle hitting a new all-time high, it’s crucial to examine the key technical indicators and chart patterns that could provide insights into its future price movements. By analyzing these factors, investors can better understand whether now is the right time to buy into Oracle’s promising growth story.

Strength across all timeframes

Oracle’s stock is currently displaying tremendous strength across all timeframes. Over the past year, the stock thrice tried to break above $130, but couldn’t and retraced from there. With today’s move that resistance is broken which is a good sign for bulls.

ORCL chart by TradingView

Investors who want to purchase the stock at current levels under $140 can do so and trail the 100-day moving average keeping it as a stop loss. If the stock falls below it, they can sell the stock. If this up move continues, based on the Fibonacci retracement from the previous swing low and swing high, the stock will next face resistance near $177 where they can book profits.

Traders who are bearish on the stock must ideally not open a short position at current levels as the stock is displaying tremendous bullish momentum. A short position can be initiated only if the stock falls below its short-term support near $115.

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