Oracle shares soar 12% after beating earnings expectations: Should you buy?

Key points

• Oracle reported strong earnings on Monday, sending its stock price soaring 12%.

• The company signed a multi-cloud partnership with Amazon Web Services.

• Is Oracle a stock to buy?

Technology giant Oracle saw its share price jump 12% after posting strong earnings on Monday that beat revenue and profit estimates.

Investors flocked to the shares of Oracle (NYSE: ORCL) on Tuesday, pushing the stock price up about 12% after the company released its quarterly earnings on Monday afternoon.

The tech giant, which offers cloud computing software and infrastructure, beat revenue and profit estimates in its first quarter of its fiscal 2025 year. The company generated $13.3 billion in revenue, up 7% year over year. It beat estimates of $13.2 billion.

Net income jumped 21% year over year to $2.93 billion, or $1.03 per share. On an adjusted basis, earnings per share rose 17% year over year to $1.30 per share, beating estimates of $1.32 per share.

Oracle’s stock price rose more than 12% on the day and closed at an all-time high. Is it too late to buy Oracle stock?

Big push for AI and data centers

Oracle’s largest business, Cloud Services, saw revenue rise 21% to $5.6 billion, driven by Oracle’s investments in AI, which helped generate revenue in its data centers, where it uses NVIDIA chips to train its AI models.

“Oracle has 162 cloud data centers in operation and under construction around the world,” said Oracle President and CTO Larry Ellison. “The largest of these data centers is 800 megawatts and will contain acres of NVIDIA GPU clusters to train AI models at scale.”

Oracle’s data center business is booming as a result of the multi-cloud partnerships it has with Microsoft and Google, Ellison added. And, as of this week, Oracle has a new multi-cloud deal.

Strategic Partnership with AWS

Also this week, Oracle announced a strategic partnership with Amazon (NASDAQ: AMZN). The two tech giants will launch Oracle Database@AWS, which allows customers to access Oracle’s database within Amazon Web Services, providing a unified, multi-cloud experience between Oracle and AWS.

“We’re seeing tremendous demand from customers who want to use multiple clouds,” Ellison said. “To meet this demand and give customers the choice and flexibility they want, Amazon and Oracle are seamlessly connecting AWS services with the latest Oracle Database technology, including Oracle Autonomous Database. With Oracle Cloud Infrastructure deployed within AWS data centers, we can provide customers with the best possible database and network performance.”

Oracle now has multi-cloud deals with the Big Three, Amazon, Microsoft and Google. On the earnings call, Ellison said this will allow customers to use Oracle’s database “anywhere and everywhere.”

Cloud partnerships with AWS, Microsoft and Google “will fuel the growth of our database business for years to come,” Ellison said.

Wall Street analysts are optimistic

Wall Street analysts were also impressed with Oracle’s earnings report.

Oracle received more than a dozen price target increases after releasing earnings Monday afternoon, including a $25 increase from Piper Sandler to $175 per share. That would be a 13% increase from its current price of $155 per share.

Piper Sandler analyst Brent Bracelin said his firm is encouraged by Oracle’s broad strength across multiple revenue streams, including its multi-cloud partners.

Oracle is banking on plans to expand its data centers as a result of high demand and these strategic partnerships. On the call, Ellison said Oracle expects to have 1,000 to 2,000 data centers around the world over time, meeting the growing need for high-performance computing.

“A lot of them will be dedicated to individual banks or telecom companies or technology companies or whatever, or nation states, sovereign clouds, all these other kinds of things,” Ellison said.

Is Oracle a stock to buy?

Oracle’s stock is up 50% so far this year, and it has a reasonable forward P/E of just 22. It has increased its operating margin to 30%, from 26%, and has about $11 billion in free cash flow.

Although Oracle stock just hit an all-time high, it is still reasonably valued and should have plenty of room to grow over the long term.

It would be unwise to buy at today’s high, but look for an opportunity to buy Oracle stock on a dip.