Oracle Corp. (NASDAQ:ORCL) rocketed higher on Wednesday after the company released its first-quarter earnings report Tuesday afternoon.
- ORCL stock is racing higher. See the real-time price action here.
Oracle reported quarterly earnings of $1.47 per share and revenue of $14.92 billion, with both figures slightly under Street estimates. However, commentary on future revenue from chairman Larry Ellison and CEO Safra Catz sent the stock surging.
Here's Why Shares Soared:
What fueled the stock surge was Oracle's aggressive growth outlook tied to AI and cloud demand.
"MultiCloud database revenue from Amazon, Google and Microsoft grew at the incredible rate of 1,529% in the first quarter," Ellison said.
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"We expect MultiCloud revenue to grow substantially every quarter for several years as we deliver another 37 datacenters to our three Hyperscaler partners, for a total of 71," he added.
CEO Catz said Oracle signed four multi-billion-dollar contracts in Q1, driving its backlog of remaining performance obligations up 359% to $455 billion.
She forecast that Oracle Cloud Infrastructure revenue will grow 77% to $18 billion this fiscal year, and then expand dramatically over the next several years to as much as $144 billion.
"Over the next few months, we expect to sign up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars," Catz said.
On the company's earnings call Tuesday, Ellison said that AI inference will be "much, much larger than the AI training market."
Ellison said that millions of customers using AI models is a "gigantic, multi-trillion-dollar market," adding that Oracle is "better positioned than anybody to take advantage of inferencing."
Analysts Weigh In
Multiple analysts raised price targets on the stock following the print:
- JMP Securities maintained Oracle with a Market Outperform rating and raised the price target from $315 to $342.
- Stifel analyst Brad Reback maintained a Buy rating and raised the price target from $250 to $350.
- Evercore ISI Group maintained an Outperform and raised the price target on Oracle stock from $270 to $340.
- Wolfe Research analyst Alex Zukin maintained Oracle with an Outperform and raised the price target from $300 to $400.
- Jefferies analyst Brent Thill maintained a Buy rating and raised the price target from $270 to $360.
- Guggenheim maintained Oracle with a Buy and raised the price target from $250 to $375.
- Cantor Fitzgerald analyst Thomas Blakey maintained an Overweight rating and raised the price target from $271 to $400.
The Bottom Line:
Investors shrugged off the slight earnings and revenue miss and piled into Oracle shares on optimism that cloud and AI adoption will supercharge future growth.
Oracle stock was up 38.49% at $334.47 on Wednesday, according to data from Benzinga Pro.
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