Oracle: Capitalizing On Hyperscalers And AI

(6min)

Summary

  • Oracle's strength lies in its legacy database business, benefiting from high switching costs and multi-cloud integration despite competitive pressures from hyperscalers and cloud-native competitors.
  • Recent earnings showed a 6% revenue growth to $14.13 billion, with core EPS missing estimates slightly. However, operating margins improved to 30.8%.
  • Oracle's push toward AI and cloud services justifies its higher valuation, with EBITDA expected to grow 16.2% annually and significant free cash flow growth anticipated from FY25 to FY27.
  • I rate Oracle stock a buy with a $199.24 price target, driven by its strategic AI and cloud integration and robust database product strength.
  • Looking for a helping hand in the market? Members of The Aerospace Forum get exclusive ideas and guidance to navigate any climate. Learn More »
Oracle biplane in Dayton Airshow

sreenath_k

Oracle Corporation (NYSE:ORCL) is not the company that comes to mind when considering investment opportunities capitalizing on cloud and AI growth. The main take quite is often that Oracle does not have the scaling power of hyperscalers. However, through Oracle’s legacy database

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This article was written by

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Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.

Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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