Free Trial

A Bubble is Brewing in Oracle Stock, and it’s Only Getting Bigger

Oracle Stock

Key Points

  • Oracle had a game-changing year in 2024, and F2025 will only be better, with growth accelerating to double-digits.
  • Partnerships with Microsoft and Google will turbocharger growth as the company races to meet the demand. 
  • Analysts are raising their price targets and leading this stock to another 15% to 30% gain. 
  • 5 stocks we like better than Oracle

An AI-driven bubble is forming in Oracle’s NYSE: ORCL shares, which is only getting bigger. The FQ4 release highlights a supply-demand situation in which demand outpaces supply, and Oracle invests to meet the need. Demand and budding partnerships with major cloud providers such as Microsoft NASDAQ: MSFT and Google NASDAQ: GOOG are elevating this company into the pantheon of AI powerhouses, the few companies able to capitalize and monetize AI. Fiscal 2024 was a game-changing year, and 2025 will only be better

Guidance from CEO Safra Catz is an expectation for revenue growth to accelerate sequentially throughout the year and result in double-digit annual growth. A robust increase in RPO supports guidance. The remaining performance obligation increased by 44% and suggests the business acceleration in 2025 will also be robust. 

Oracle Rises on Weak Results 

Oracle Today

Oracle Co. stock logo
ORCLORCL 90-day performance
+2.01 (+1.41%)
(As of 07/12/2024 ET)
52-Week Range
Dividend Yield
P/E Ratio
Price Target

Oracle’s Q4 results were weaker than expected, but two mitigating factors are at play. The first is that analysts set a high bar, so the 200 basis points of top-line underperformance aren’t as bad as they look. The second is the outlook. The company inked major deals with Google and Microsoft to link their clouds. Now, MSFT Azure and Google Cloud users will have access to Oracle’s many products and services to turbocharge (in their words) cloud revenue growth. Among those users is OpenAI, which also signed a contract to use Oracle's cloud to train its ChatGPT LLM.

Oracle’s $14.29 billion in revenue is up 3.3% compared to last year, driven entirely by cloud services and support, which grew by 9%. Cloud License and On-Premise License fell by 14%. Within Cloud Services and Support, the total cloud grew by 20% on a 42% increase in IaaS and a 10% gain in SaaS. Fusion Cloud ERP grew by 14%, and Netsuite Cloud ERP by 19%. 

The margin news is mixed but ultimately favorable to investors. The operating margin improved but was offset by increased tax provisions that resulted in a 5% decline in net income. The takeaway is that $1.63 in adjusted earnings is down slightly from last year and missed the consensus but is sufficient to sustain the dividend outlook, balance sheet health, and business reinvestment. 

Investors Expect Robust Dividend Growth From Oracle

Oracle Dividend Payments

Dividend Yield
Annual Dividend
Dividend Payout Ratio
Next Dividend Payment
Jul. 25
See Full Details

Oracle is a solid dividend-paying stock with a yield aligned with the broad market average. The difference is that Oracle has been increasing the payout at an above-average pace for years and is expected to continue because the payout ratio is very low at 28%, and earnings are expected to grow. The analysts' consensus for F2025 was strong at 13% before the Q4 report was released, and estimates are now rising, so the company should easily sustain its 15% distribution CAGR.  

Balance sheet highlights support the outlook for robust dividend growth. The Q4 highlights include increased cash, receivables and assets compounded by debt reduction. The net result is a 6X increase in shareholder equity and improved corporate leverage. 

Analysts Raise Targets for Oracle and Forecast 15% to 30% Upside

Analysts are raising their targets for Oracle stock following the Q4 release, leading it to a new high. tracks over a dozen revisions, all upward, and most are above the consensus forecast. The consensus forecast assumes about a 10% upside, while the range of new targets implies a 15% to 30% upside and has lifted the ceiling. Guggenheim set a new high target of $175, which will likely be exceeded over time. Trading at only 20X this year’s and 18X next year’s earnings estimates, it is a value compared to leading blue-chip AI/cloud players.

The technical action is promising. The market is up nearly 8% in premarket trading, setting a new high. If the market follows through on this signal, it should continue to advance. Because the stochastic and MACD indicators show a strong buy signal, the move could gain momentum over the next few days to several weeks, resulting in a melt-up for this stock. 

Oracle stock Chart

→ Why we just sold half of our stocks (From Behind the Markets) (Ad)

Should you invest $1,000 in Oracle right now?

Before you consider Oracle, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Oracle wasn't on the list.

While Oracle currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Beginner's Guide to Pot Stock Investing Cover

Click the link below and we'll send you MarketBeat's guide to pot stock investing and which pot companies show the most promise.

Get This Free Report
Thomas Hughes
About The Author

Thomas Hughes

Contributing Author

Technical and Fundamental Analysis

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Microsoft (MSFT)
4.7309 of 5 stars
4.73 / 5 stars
$453.55-0.3%0.66%39.27Moderate Buy$469.86
Alphabet (GOOG)
4.0541 of 5 stars
4.05 / 5 stars
$186.78-0.3%0.43%28.65Moderate Buy$174.38
Oracle (ORCL)
4.8207 of 5 stars
4.82 / 5 stars
$144.77+1.4%1.11%39.02Moderate Buy$145.83
Compare These Stocks  Add These Stocks to My Watchlist 

Featured Articles and Offers

Recent Videos

CPI News Breakdown: Key Market Moves to Follow
Understanding Oversold Stocks
Inside Pelosi’s Latest Stock Moves

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines