Shares of Oracle (ORCL) have shot up over +10% today following the cloud provider’s stellar performance in the fiscal first quarter, surpassing both revenue and earnings expectations.
As a standout tech stock in 2024, ORCL has surged by nearly +50% year-to-date, prompting investors to ponder whether they should ride the wave of the post-earnings surge.
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Oracle’s Swift Sail Through Q1
A buoyant cloud infrastructure revenue, notably powered by high-performance AI applications utilizing RDMA from the Nvidia (NVDA) collaboration, was the primary impetus behind Oracle’s robust Q1 results.
In Q1, Oracle’s sales climbed 7% year over year to $13.3 billion, surpassing estimates of $13.21 billion. Furthermore, earnings per share of $1.39 outperformed expectations by 5%, marking a 17% surge from the prior year’s Q1 EPS of $1.19.
Additionally, Oracle unveiled a fresh partnership with Amazon (AMZN), enabling clients to access its databases via Amazon Work Shop (AWS).
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Charting Revenue Projections & Growth Trajectory
Looking ahead to the second quarter, Oracle anticipates 8%-10% revenue growth, aligning with the Zacks Consensus for $14.01 billion in sales or an 8% upsurge.
Per Zacks estimates, Oracle’s total sales are set to ascend by 9% in FY25 to $57.82 billion from $52.96 billion in FY24. Further, FY26 is projected to witness a supplementary 11% rise to $64.02 billion.
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Notably, Oracle estimates an 11% uptick in annual earnings in FY25, with a subsequent 13% surge forecasted in FY26, reaching $6.98 per share.
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Valuation in the Vast Ocean of Stocks
Currently trading around $155, Oracle’s stock boasts a forward earnings multiple of 22.6X, slightly below the S&P 500’s 23X and a favorable discount compared to the Zacks Computer-Software Industry average of 33.6X.
Moreover, Oracle’s valuation stands at a discount relative to the forward P/E ratios of its tech peers, with Nvidia and Amazon trading at 38X and 36.9X forward earnings respectively.
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The Finale
Following its Q2 announcement, Oracle’s stock is adorned with a Zacks Rank #2 (Buy). With flourishing partnerships expanding Oracle’s cloud empire, now may indeed be an auspicious time to delve into ORCL as the company continues to validate its promising growth trajectory.
