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Oracle Corporation (ORCL), headquartered in Austin, Texas, offers products and services that address enterprise information technology (IT) environments. Valued at $352.36 billion by market cap, the company provides cloud solutions and services that can be used to build and manage various cloud deployment models. Its businesses included cloud and license, hardware, and services. Its products and services include enterprise applications and infrastructure offerings delivered worldwide through various flexible and interoperable IT deployment models.
Shares of this software giant have underperformed the broader market over the past year. ORCL has gained 14.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 17.3%. However, in 2024, ORCL stock is up 23.9%, surpassing SPX’s 10.1% rise on a YTD basis.
Narrowing the focus, ORCL’s gains over the past 52 weeks are overshadowed by the S&P 500 Technology Sector SPDR (XLK). The exchange-traded fund has gained about 17.8% over the past year. However, the stock’s gains on a YTD basis outshine the ETF’s 4.7% returns over the same time frame.
ORCL’s overall performance can be attributed to the strong growth of its cloud business. The company has benefitted immensely from the migration from on-premise software to off-premise infrastructure or the cloud. The cloud migration services market is forecasted to grow to $70 billion by the end of this decade, representing an annual growth of about 26% till 2030.
Moreover, the rise of AI is also benefiting the company as demand for its cloud services has soared. For the fiscal year ended May 31, cloud services and license support rose 12% year over year to $39.4 billion. ORCL’s cloud infrastructure is expected to remain in high demand, given its ability to run AI workloads.
On Jun. 12, ORCL shares rose more than 13% after the company announced cloud infrastructure deals with Microsoft Corporation (MSFT), OpenAI, and Alphabet Inc.’s (GOOGL) Google Cloud.
For the current fiscal year, ending in May 2025, analysts expect ORCL’s EPS to grow 8.7% to $5.02 on a diluted basis. The company’s earnings surprise history is impressive. It beat or matched the consensus estimate in each of the last four quarters.
Among the 29 analysts covering ORCL stock, the consensus rating is a “Moderate Buy.” That’s based on 17 “Strong Buy” ratings and 12 “Holds.”
This configuration has been consistent over the past three months.
Recently, Piper Sandler analyst Brent Bracelin maintained an “Overweight” rating on ORCL stock and maintained a price target of $150, implying a potential upside of 17.3% from current levels.
The mean price target of $149.64 represents a 17% premium to ORCL’s current price levels. The Street-high price target of $175 suggests an ambitious upside potential of 36.9%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
