Can Oracle bring another stunning earnings report?

Oracle will announce its quarterly performance for the quarter ending in August after the closing of the US stock market on Monday.

There is increasing anticipation that its Oracle Cloud Infrastructure business will benefit from AI workloads, which have already increased by over 50% this year, surpassing expectations.

Oracle expects its currency revenue to continue growing by 8% to 10% this quarter, with earnings per share ranging from $1.12 to $1.16. Oracle also anticipates cloud-based revenue (excluding the acquisition of healthcare IT company Cerner) to be between 28% and 30% this quarter.

Wall Street analysts generally expect revenue for the August quarter to be $12.4 billion, an 8.8% YoY increase, with adjusted earnings per share of $1.15.

For the November quarter, Wall Street predicts revenue of $13.3 billion, an 8% YoY increase, with adjusted earnings per share of $1.34.

Oracle CEO Safra Catz has stated that she believes cloud demand will reach unprecedented levels in Oracle's fiscal year 2024, with growth on par or better than the fiscal year 2023.

Oracle continues to transition traditional customers to cloud-based versions of its flagship database software and enterprise application suites, including NetSuite and Fusion. However, Oracle's story is also driven by Oracle Cloud Infrastructure (OCI) and its role in the field of artificial intelligence.

Additionally, Oracle benefits from its partnership with NVIDIA, which provides a significant allocation of GPU chips for Oracle to offer AI computing services to its customers.

Analysts are optimistic

TD Cowen analyst Derrick Wood said, "Our survey still highly favors the trend of OCI demand. The stock has been volatile this year, but we still believe OCI's story has not received sufficient attention." Wood maintains an outperform rating on Oracle with a target price of $137.

Other analysts are equally optimistic. They maintain a buy rating on the stock with a target of $150.

DiFucci stated that Oracle remains his top idea based on the company's application migration to the cloud, adoption of OCI as an alternative to other cloud providers, and the migration of its database business to the cloud. He wrote, "The first project is underway with significant room for growth, the second project is still in its early stages, and the third project has just begun."

Monness Crespi Hardt analyst Brian White pointed out that while most software vendors have little to show in terms of AI trends despite the hype, Oracle is different. He noted that during the May quarter conference call, Oracle announced OCI contracts worth over $2 billion with Gen AI customers. He said, "Oracle has performed exceptionally well in training large language models." White maintains a buy rating on the stock with a target price of $140.