Oracle is the IBD Stock of the Day for Friday. Shares of the enterprise tech giant shook off a slide from early in the week and briefly swung up beyond a trendline entry Friday morning.
The 48-year-old database software and cloud-computing company hosts its largest annual customer conference next week in Las Vegas. The focus is clear: Oracle renamed the gathering to AI World, from the previous CloudWorld. AI, of course, has been the crucial driver for Oracle stock's nearly 80% rally this year.
The event comes a little more than a month after Oracle stock soared following its fiscal first-quarter report, where the tech giant said its backlog of contracted revenue had swelled to nearly $500 billion, driven by demand for cloud-based servers to train and operate AI algorithms. AI World is also the first major event for Oracle's new leadership. The company announced a pair of new chief executives last month, with former CEO Safra Catz shifting to an executive vice chair role.
Oracle Stock Reverses Higher For Week
It has been an active week for Oracle stock leading into the event. Shares took a hit earlier this week after The Information reported that the company is seeing slim profit margins from the cloud servers it rents to AI startups.
But Oracle stock bounced back on Thursday following positive analyst commentary. A 3.1% gain on the day sent Oracle decisively back above the stock's 21-day moving average.
Oracle stock slipped 1.4% to close at 292.96 on Friday's stock market trading.
Oracle stock climbed as high as 307 in earlier trading Friday, briefly clearing a trendline entry around 300. But shares erased gains as the the broader stock market tumbled after President Donald Trump threatened further tariffs on China.
It's notable that Oracle did not sell off Friday, and is up solidly for the week.
'All Eyes' On The Numbers For Oracle
Next week, Oracle is expected to brief stock analysts as part of its annual conference. Oracle stock jumped following last fall's analyst day, when it told investors it expected revenue to reach $104 billion by its fiscal 2029. Its leaders have only grown more bullish since then. Catz last month projected that Oracle would reach $144 billion in cloud infrastructure sales alone by its fiscal 2030.
But investors are also weighing the huge costs for Oracle to meet AI demand.
Some analysts have raised broader concerns about the circular nature of AI investments. ChatGPT creator OpenAI and chipmaker Nvidia are at the center of a web of investment commitments, cloud contracts and strategic partnerships that include most big names in the tech industry. A huge portion of Oracle's revenue backlog, for instance, is driven by a growing partnership with OpenAI, including a reported $300 billion cloud contract.
Monness Crespi Hardt analyst Brian White wrote in a client note Thursday that "all eyes" will be on whether Oracle offers new financial expectations at the conference.
"We expect Oracle to issue updated financial targets, especially after dropping a large RPO (remaining performance obligations) number and guiding for Oracle Cloud Infrastructure revenue to reach $114 billion in (fiscal year 2029)," White wrote.
White is neutral on Oracle stock overall.
"Oracle represents a high-quality company with a cloud transformation story and new growth opportunities driven by gen AI," White wrote. "However, valuation is stretched, capital expenditures elevated, free cash flow negative, competition fierce, and the macro treacherous."
Stocks Dive As Trump Fires Back At China. Here's What To Do.
AI Everywhere
Evercore ISI analyst Kirk Materne raised his price target for Oracle stock to 350 from 340 while reiterating an outperform call.
"The bottom line is that we expect Oracle could deliver some upside vs. our fiscal year 2030 revenue forecast ($200 billion seems reasonable) and confirm annualized EPS growth (fiscal year 2025-2030) of roughly 20%," Materne wrote to clients on Friday.
Oracle last rebranded its conference in 2020, when Oracle OpenWorld became Oracle CloudWorld. At that point, the company was working to bring more attention to OCI, which was a latecomer to a cloud market dominated by Amazon, Microsoft and Google parent Alphabet.
AI has bolstered Oracle's challenge to cloud's so-called Big Three. Analysts expect the company to use its conference to highlight how the technology can be used to boost business productivity.
"When taking a look at the AI World keynotes we expect the messaging to center on the deep integration of artificial intelligence — particularly generative models — across Oracle's entire technology stack, from infrastructure to SaaS (software-as-a-service)," Materne wrote. "A major emphasis will be on bridging trusted enterprise data with cutting-edge AI capabilities to unlock new business value while ensuring governance and control."
Oracle Stock Bounces Back
Meanwhile, Oracle has pulled back significantly from a record high of 345.72 on Sept. 10. But shares remain ahead more than 75% year to date.
Oracle peaked briefly above a trendline entry point near 300 early Friday. The trendline was drawn across the highs of Sept. 10 and 22, and Oct. 9. Shares were ahead just under 4% overall for the week.
Oracle stock has an IBD Composite Rating of 92 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one easy-to-use rating.
