Oracle is the IBD Stock of the Day as the large-cap software stock finds support at its 21-day exponential moving average. Oracle stock now is actionable after getting a bounce from its 10-week moving average.
On the stock market today, shares added 0.6% to 117.91. They hit a record high in mid-June as investors focused on potential growth from artificial intelligence workloads running on its cloud-computing network.
Oracle stock has gained 43% in 2023. Further, it holds a 127.54 buy point from a flat base.
But shares now are available as they surpassed an early entry Tuesday at 117.60, its July 27 high.
Cloud Computing A Growth Driver
Jefferies analyst Brent Thill holds a buy rating on Oracle stock. He also notes the Oracle Cloud Infrastructure business, or OCI, has been a bright spot.
"The continued execution of OCI has led to improving investor sentiment, and ongoing cost cuts around Cerner should be accretive to margins as management team continues to deliver on top and bottom line goals," Thill said in a recent note to clients.
He added: "As OCI grows in scale and AI workloads begin to materialize, we believe the stock deserves a rerating more in line with its industry peers."
Oracle's multiyear business restructuring has moved the database software giant solidly into cloud computing. In addition, Oracle bought health care giant Cerner in 2022, continuing an acquisition spree that has spanned decades.
In 2016, Oracle acquired NetSuite for $9.3 billion. NetSuite sells cloud-based enterprise resource planning software.
Oracle Stock Hits Record High
Oracle hit a record high 127.54 on June 15. Also, after pulling back ORCL stock has found support at its 21-day line.
When reporting fiscal fourth-quarter earnings on June 12, Oracle management touted potential growth in its cloud business, thanks to corporate adoption of generative AI.
"Oracle has been working on clustering technology for a long time to support HPC (high performance computing) workloads and this now gives it an advantage vs. competitors as new AI workloads demand the same kind of scale/performance," TD Cowen analyst Derrick Wood said in a recent note.
Generative AI technology already is finding applications in internet search, marketing, advertising, drug development, video gaming, customer support and digital art. Generative AI creates text and images based on patterns in training data.
Meanwhile, analysts estimate earnings growth of nearly 10% to $5.62 a share for Oracle stock in fiscal 2024. Revenue is expected to grow 8% to $54.02 billion.
Oracle Stock: Technical Ratings
With a large debt load, Oracle has downsized its quarterly repurchases of ORCL stock, which boosted earnings. But Oracle still had $8.2 billion remaining in stock buyback authorization at the end of May.
Further, the IBD Stock Checkup tool shows that Oracle has a Composite Rating of 90 out of a best-possible 99. The rating means Oracle stock currently outperforms 90% of all stocks in fundamental and technical stock-picking criteria.
In addition, shares have a Relative Strength Rating of 92. The rating shows how a stock's price performance over the last 52 weeks holds up against all the other stocks in IBD's database.
Also, Oracle stock has an Accumulation/Distribution Rating of B. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A grade of A signals heavy institutional buying.
