- Database and software giant a major player in new AI world
- Powerful innovation at heart of investment story
- $15-plus billion revenue boost over next few years
It’s been a quite a ride for Oracle (ORCL:NYSE) this year, shares in the database monster rallying 22% so far even after September’s sharp rebasing. That’s twice the return of the S&P 500 although not quite as strong as the Nasdaq Composite’s 25% gain.
Like other tech stocks, AI (artificial intelligence) has powered the shares’ strong run this year so its AI executive forum late last week (19 Oct) had been hotly anticipated by Wall Street watchers. This was a customer-focused event showcasing the company’s AI prowess and strategy across its products and services, so how did it go down with analysts?
WALL STREET ANALYSTS IMPRESSED
Analysts at Mizuho, who were already big fans of the stock with a $150 price target on the shares, said while Oracle is currently building out OCI superclusters (Oracle Cloud Infrastructure) to satisfy the accelerating demand for AI workloads, they believe ‘current full year 2024 (to 31 May) revenue guidance doesn’t include much contribution from the $4 billion-plus of AI bookings.’
Overall, Mizuho came away from the event ‘more confident in Oracle’s approach to leverage AI to expand the breadth of its product offering and improve its competitive standing’, the analysts said.
At Wolfe Research, analysts maintained their $140 price target post event saying, ‘the key message is that there is no shortage of demand for AI services, and Oracle is accelerating its innovation engine with new upgrades at every layer of the tech stack.’
They said that ‘demand is incredible.’
| Oracle revenue growth seeded by strong AI demand |
| Full year (31 May) | 2023 | 2024 | 2025 | 2026 |
| Consensus ($bn) | $49.95 | $53.69 | $58.16 | $63.78 |
| Source: Koyfin |
Demand for Oracle AI products is a theme analysts at JPMorgan pumped too, saying they continue to see Oracle doing a solid job of marketing its platform capabilities into the emerging set of GenAI opportunities, or Generative AI. They noted that ‘demand is not the issue,’ with growth in demand still exceeding growth in supply.
UNIQUE AND POWERFUL INNOVATION
‘This is truly an innovative company that will create new technologies based on original ideas, while also leveraging developments from the greater technical community to provide the best technology available for its customers’, Guggenheim analysts told clients in a note.
Goldman Sachs said much the same thing, with a firm belief that Oracle’s innovations in both OCI and cloud applications can augment its ability to achieve its full year 2026 revenue target of $65 billion [Goldman’s forecast] as GenAI features in SaaS (software-as-a-service) drive on-premise conversions and legacy displacements, while AI services on the infrastructure layer support incremental share of new workloads.
Oracle is ‘well-positioned to capture AI mindshare at the enterprise level given the company’s ability to be a one-stop-shop suite vendor for its customers,’ said analysts at Evercore ISI.
