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The Stock of Oracle is Soaring Thanks to New Deals in the Cloud

March 12, 2024
minute read

Oracle Corp.'s stock experienced a noteworthy 14% increase during extended trading on Monday following the release of mixed financial results, coupled with an announcement from the company's board declaring a quarterly cash dividend of 40 cents per share of outstanding common stock.

Oracle's Chief Executive, Safra Catz, highlighted the significant impact of large new cloud infrastructure contracts signed in Q3, leading to a 29% surge in the company's total remaining performance obligations, reaching an unprecedented figure of over $80 billion. Catz emphasized that this achievement sets an all-time record for Oracle.

Furthermore, she expressed confidence in the company's ability to secure additional substantial contracts for cloud infrastructure capacity due to the high demand for their Gen2 AI infrastructure, which currently outstrips supply. Catz noted that despite the rapid expansion of new and existing cloud data centers, the demand remains robust.

For the fiscal third quarter, the database pioneer reported a net income of $2.4 billion, or 85 cents per share, a notable improvement compared to the net income of $1.9 billion, or 78 cents per share, recorded in the corresponding quarter of the previous year. Adjusted earnings for the quarter were reported at $1.41 per share.

Revenue for the quarter saw a 7% increase, reaching $13.28 billion compared to $12.4 billion in the same quarter a year ago. While the financial results were mixed, they exceeded the expectations of analysts surveyed by FactSet. On average, analysts had anticipated net income of $1.38 per share on revenue of $13.3 billion.

The surge in Oracle's stock comes amid positive momentum for the company, with a 34% increase over the past year. In comparison, the broader S&P 500 index has gained 33%, underscoring Oracle's robust performance relative to the broader market.

Oracle's success in securing large cloud infrastructure contracts and its commitment to meeting the demand for Gen2 AI infrastructure contribute to the company's optimistic outlook. The declaration of a quarterly cash dividend further enhances Oracle's appeal to investors, reflecting a balanced approach to rewarding shareholders while maintaining a focus on strategic growth initiatives.

As Oracle continues to navigate the dynamic landscape of cloud services and artificial intelligence, the company's ability to adapt and capitalize on emerging opportunities positions it as a key player in the evolving technology sector. Investors will be closely monitoring Oracle's future performance and strategic moves in this rapidly changing industry.

John Liu
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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