To The Moon

$Oracle(ORCL)$ is expected to release earnings on 11 Mar 2024 after the market closes (AMC).

Oracle is expected to show a rise in quarterly revenue for the period ending 19 Feb 2024. Revenue is expected to show a 7.3% increase to $13.306 billion from $12.4 billion a year ago, according to the mean estimate from 20 analysts, based on LSEG data. (Revenue Basis is on Non-GAAP Revenue).

Earnings per share is expected to come in at $1.38. Oracle’s EPS guidance on 11 Dec 2023 for the period ended 29 Feb was between $1.35 and $1.39.

After a disappointing first-half of the year, sentiments are mixed around Oracle’s third-quarter results. Oracle will struggle to meet third-quarter expectations as it deals with a tough macroeconomic environment along with a "steep hill of new business needed to achieve consensus estimates.

But it would be unusual for Oracle to miss three quarters in a row. The investment firm believes Oracle's third-quarter expectations are achievable.

Investors will also be keeping a close eye on the company's capital expenditure as it builds out data center capacity to support growing demand for Oracle Cloud Infrastructure due to strong AI bookings.

Oracle (ORCL) Last Reported Earnings

ORCL last reported earnings on 11 Dec 2023 after the market close (AMC). ORCL shares declined -12.4% the day following the earnings announcement to close at 100.42. Following its earnings release, 90 days ago, ORCL stock has drifted +12.0% higher.

From the time it announced earnings, ORCL traded in a range between 98.88 and 117.79. The last price (112.42) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 8.7%. Oracle has more than 10% decline in the last 2 reported quarter with implied straddle coming in between 5.1 to 6.2%.

If Oracle spending expenditure to expand its data center offering would be covered by its strong software sales, we could see a positive price effect. Else we might see a consecutive 3 quarters decline post earnings.

Oracle (ORCL) Post Earnings Movement

The options market overestimated ORCL stocks earnings move 50% of the time in the last 12 quarters. The predicted move after earnings announcement was ±6.5% on average vs an average of the actual earnings moves of 6.2% (in absolute terms).

This suggest that Oracle is slightly overvalued on the option valuation, and we could see price volatility, if Oracle does not do well in its major segments, we could see a negative price move post earnings.

Technical Analysis - Oracle (ORCL) - Current

The technical is giving a Top Pullback signal, this suggest that Oracle might experiencing a temporary dip of its stock price, this would very much depend on how Oracle have managed to get sales number from demand for its cloud infrastructure.

Simple Moving Average (SMA)

From the 50-day MA period, Oracle is currently trading above it, which is a good sign, but we might see a dip if the capital expenditure exceed what the strong AI bookings bring to Oracle.

MACD (Moving Average Convergence/Divergence)

Using the daily chart, we could see that Oracle is trying to get out of the pullback, but we are not seeing very strong bull power to assist, mainly because investors could be concerned about how Oracle would deal with a tough macroeconomic environment along with a "steep hill of new business needed to achieve consensus estimates.

Oracle Hedge Fund Increase Holdings

Hedge fund are still pretty confident on Oracle as we could see about 1.4 million of shares increase over the last quarter. This could mean we might see increased interest in traders and investors prior to its earning result.

Summary

Oracle might struggle with capital spending as it try to beef up its cloud infrastructure to meet demand for AI bookings. If we were to consider the demand for Cloud Infrastructure, Oracle does not really stand out in the leaderboard.

What I would be more interested is whether the return on investment for the capital expenditure for cloud infrastructure would be covered by the sales coming from the strong demand for Oracle cloud due to strong AI bookings.

Appreciate if you could share your thoughts in the comment section whether you think Oracle sales number would beat expectations due to strong demand for its cloud because of AI.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.