Published June 12th 2024

Daily Brief - AI Partnerships and Cloud Momentum

TLDR: With Oracle's fiscal fourth-quarter results on deck after the bell, investors are eager to see how the tech giant is performing amidst a challenging economic landscape.

AI Partnerships and Cloud Momentum

Analysts peg Oracle's profit at $3.29 billion, slightly below last year's $3.32 billion, but revenue is projected to climb to $14.58 billion from $13.84 billion.

Oracle's cloud infrastructure business has been on fire, with third-quarter cloud revenue jumping 25%, fueled by the AI boom. In March, the company reported that cloud infrastructure demand drove performance obligations to a record high.

CEO Safra Catz highlighted large new cloud infrastructure contracts and expects continued strong demand, despite limited supply. Oracle is rapidly expanding its data centers to meet this demand. Investors will be laser-focused on any hints that Oracle is overcoming supply issues and accelerating revenue growth.

Oracle recently announced partnerships with AI leaders like Microsoft (MSFT) and Palantir Technologies (PLTR). These partnerships have helped Oracle monetize AI through enterprise offerings and focus on sovereign AI, which is crucial amid data privacy concerns.

Oracle shares have gained over 19% since the start of the year, closing at $124.50 on Monday.

Scenario Spotlight: Response from ORCL post a beat

Response from ORCL post a beat

The chart above highlights Oracle's historical 1-month response following past instances of beating EPS estimates. Look out for significant movement (to the upside) in the days after, given the market likes the earnings report.

Market Movers: Response from ORCL's peers

Here is the historical 1-month response from ORCL's peers when the company has previously beaten earnings estimates:

  1. ServiceNow (now) - 3.52%
  2. Amazon (amzn) - 3.31%
  3. Microsoft (msft) - 3.14%
  4. Adobe (adbe) - 3.06%
  5. Workday (wday) - 2.33%
  6. Salesforce (crm) - 2.28%
  7. Alphabet A (googl) - 1.45%
  8. IBM (ibm) - 1.05%
  9. SAP ADR (sap) - 0.95%
  10. Snowflake (snow) - -2.72%

Earnings Spotlight: More insight from the Semi industry

More insight from the Semi industry

Broadcom shares have outperformed the industry YTD, driven by strong AI adoption and deployment. In Q1 2024, Broadcom's AI revenues in the semiconductor segment soared 400% year-over-year to $2.3 billion, despite slow enterprise and telco markets.

The company projects fiscal 2024 AI revenues to reach $10 billion and expects networking revenues to rise 35% year-over-year, driven by increased networking connectivity and AI accelerators in hyperscalers. VMware bookings are anticipated to boost revenue growth throughout fiscal 2024, with sequential double-digit growth expected.

Daily Brief - AI Partnerships and Cloud Momentum

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