Big Tech Oracle (ORCL) has been on a tear since its March earnings report. The Big Cap 20 company teamed up with an industry powerhouse in its AI initiatives.
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The Austin, Texas-based behemoth has a $274 billion market cap, having grown into one of the largest players in cloud computing.
Oracle’s cloud and license business makes up 83% of its revenue, the services segment is 10% and hardware makes up the other 7%.
Its cloud infrastructure could be a big growth driver, because it includes AI and machine learning. Those are two of the hottest areas in the tech sector today.
Big Tech Oracle And Nvidia Team Up
Oracle partnered in late March with Nvidia (NVDA) to run Nvidia’s AI applications on the new Oracle Cloud Infrastructure (OCI) Supercluster.
“OCI is the first platform to offer an AI supercomputer at scale to thousands of customers across every industry,” said Clay Magouyrk, executive vice president of Oracle Cloud Infrastructure.
In another key move, the U.S. government’s FedRAMP this month expanded its use of Oracle OCI to U.S. government agencies, plus civilian, defense and intelligence communities.
Oracle holds the top spot out of 27 stocks in the database software industry group. The group soared to fourth from 59th place four weeks ago, as tech stocks found new strength.
Shares Hit A 52-Week High And Top Buy Zone
Oracle stock is approaching the 106.34 peak reached in December, 2021. Its rally has left the stock extended from buy areas, however.
Shares are slightly above the 5% buy zone from a three-week-tight pattern that goes from 96.84 to 101.68. Before that, a handle buy point at 91.32 was a productive entry.
Oracle plunged below the 50-day moving average following the March 9 release of its February-ended quarterly report. But shares got a lift in late March, after the AI partnership with Nvidia was announced.
In unrelated news, Oracle announced its Java 20 release on March 21. Shares of the Big Tech stock have gained nearly 25% since the March lows.
Quarterly Earnings Show Signs Of Life
The company’s earnings and sales started to revive after several lifeless quarters.
In March, it reported adjusted earnings of $1.22 a share on revenue of $12.4 billion for its fiscal third quarter ended Feb. 28.
Analysts expected Oracle to earn an adjusted $1.20 a share on revenue of $12.43 billion, according to FactSet.
The 8% quarterly earnings growth was an improvement over the three previous quarters, which all were flat on a year-over-year basis, according to MarketSmith.
Quarterly sales increased at a consistent 18% rate the last three quarters. That’s not exactly raging growth, but it was an improvement over single-digit gains the previous several quarters.
Analysts expect a 9% EPS drop in the fiscal year ending this month, then 14% growth in the next fiscal year. The Big Tech company reports its fiscal fourth quarter earnings around mid-June.
Mutual funds own 40% of shares, with 3,280 funds in March, up from 3,228 in December and 3,087 in September.
The Big Tech company in March raised its quarterly dividend to 40 cents a share, which works out to a 1.6% annualized yield.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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