Oracle Q4 Earnings Preview: Analyst Estimates, Key Items To Watch Including Cloud Infrastructure Momentum, AI Partnerships

Software company Oracle Corporation ORCL is set to report fourth-quarter financial results after the market close on Tuesday, June 11, 2024.

Here is a look at the earnings estimates and key items to watch.

Earnings Estimates: Analysts expect Oracle to report fourth-quarter revenue of $14.59 billion according to data from Benzinga Pro.

The revenue estimate represents an increase over last year's fourth-quarter total of $13.84 billion.

Oracle has missed analysts' revenue estimates in three straight quarters and missed estimates in five of the last 10 quarters.

Analysts estimate Oracle will report fourth-quarter earnings per share of $1.65 compared to $1.67 in last year's fourth quarter. The company has beaten analysts' earnings per share estimates in six straight quarters and eight of the past 10 quarters.

What Analysts Are Saying: Momentum around large and long-term deals could help Oracle continue momentum in the fourth quarter, Morgan Stanley analyst Keith Weiss said.

The analyst, who has an Equal-weight rating and $155 price target, said forward estimates for Oracle have been largely unchanged year-to-date.

Weiss said investors have hope Oracle can capitalize on the scarcity of AI hardware in the current cycle.

The analyst sees a positive near-term outlook for Oracle and said the shares could be rewarded. The analyst calls the valuation of 22x CY24 P/E as "reasonable."

Multiple analysts raised their price targets on Oracle in March after the third-quarter financial results.

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Key Items to Watch: The momentum of Oracle's cloud infrastructure business remains a key item to watch in the fourth-quarter earnings results. Overall cloud revenue was up 25% year-over-year in the third quarter with cloud infrastructure revenue up 49% year-over-year.

"We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly," Oracle CEO Safra Catz said after third quarter financial results.

Another item to watch will be any update or official announcement of a reported collaboration between Oracle and xAI, the AI startup from Elon Musk.

A report from The Information previously said xAI was finalizing a $10 billion contract with Oracle for cloud services.

Oracle also announced plans to open two Oracle Cloud Regions in Morocco to expand its enterprise cloud services across Africa.

The growth of international revenue and any government contracts for AI business could be in the spotlight during fourth-quarter results.

Oracle was a popular stock pick of institutional investors in the first quarter. The fourth-quarter results could show if Oracle being a top 10 holding of several institutions in the first quarter was a wise move going forward.

ORCL Price Action: Oracle shares trade at $124.28 on Monday at publication versus a 52-week trading range of $99.26 to $132.77. Oracle stock is up 20% over the last year.

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