Why Oracle Stock Is Moving Higher Tuesday

Oracle Corp ORCL shares are trading higher Tuesday after the company reported better-than-expected financial results.

What Happened: Oracle said fourth-quarter revenue increased 17% year-over-year to $13.8 billion which beat average analyst estimates of $13.73 billion, according to Benzinga Pro. The company reported quarterly adjusted earnings of $1.67 per share, which beat consensus estimates of $1.58 per share.

"Our infrastructure growth rate has been accelerating—with 63% growth for the full year, and 77% growth in the fourth quarter. Our cloud applications growth rate also accelerated in FY23. So, both of our two strategic cloud businesses are getting bigger—and growing faster. That bodes well for another strong year in FY24," said Safra Catz, CEO of Oracle.

Oracle highlighted that Nvidia Corp NVDA is using the company's clusters for AI infrastructure. Chairman and CTO Larry Ellison noted that Oracle's GPU clusters are built using the highest-bandwidth and lowest-latency RDMA network.

"As a result, cutting edge companies doing LLM development such as Mosaic ML, Adept AI, Cohere plus 30 other AI development companies have recently signed contracts to purchase more than $2 billion of capacity in Oracle's Gen2 Cloud," Ellison said.

On the conference call following the company's quarterly results, Oracle said it has been experiencing unprecedented demand for cloud and AI services. 

The company guided for fiscal first-quarter revenue growth of 8% to 10%. Cloud revenue is expected to grow between 28% and 30% year-over-year. 

Oracle expects first-quarter earnings to be between $1.11 and $1.15 per share versus estimates of $1.14 per share. 

Oracle's board declared a quarterly cash dividend of 40 cents per share. 

Following the print, Goldman Sachs analyst Kash Rangan upgraded Oracle from Sell to Neutral and announced a $120 price target.

BMO Capital analyst Keith Bachman maintained Oracle with a Market Perform and raised the price target from $96 to $132. UBS analyst Karl Keirstead maintained a Neutral rating and raised the price target from $110 to $120.

ORCL Price Action: Oracle shares were up 5.11% at $122.38 at the time of writing, per Benzinga Pro.

Photo: Peter Kaminski from Flickr.