Oracle (ORCL:NYSE) $302.14

Gain to date: 82%

Investors won’t often see a company’s market cap jump $250 billion in a single day, and of all the tech companies to reinvent themselves through the power of AI, Oracle (ORCL:NYSE) may be one of the more surprising.

Blowout earnings (9 September) saw shares in the software infrastructure giant surge 36%, its biggest single-day gain in more than 30 years, after its report left analysts ‘in shock’, according to CNBC. It also made co-founder and chair Larry Ellison the world’s richest man, thanks to his 41% stake, overtaking Elon Musk, on paper anyway.

WHAT HAS HAPPENED SINCE WE SAID BUY?

AI has breathed new life into the old dog, something Shares has been discussing for two years or more, leading us to pitch the stock as one of our Great Ideas a year ago.

Oracle tore up growth expectations after announcing hundreds of billions of dollars’ worth of contracted revenue from cloud deals with AI giants, including OpenAI.

Oracle is expecting to rake in $455 billion over the next few years for contracts booked last quarter, a fourfold increase from the same time last year. That’ll skyrocket its cloud infrastructure revenue from $10 billion last fiscal year to $144 billion by 2030, Oracle projected.

WHAT SHOULD INVESTORS DO NOW?

Oracle is banking on this big investment paying off in the years to come and that its quarterly revenue growth has accelerated over the past 12 months from 7% in the first quarter of fiscal 2025 to an expected 13% for the first quarter of fiscal 2026 is encouraging.

CEO Safra Catz has forecast 16% revenue growth in fiscal 2026 and analysts see that growth accelerating to 20% in fiscal 2027 and 24% in fiscal 2028. Analyst consensus, according to Koyfin data, anticipates much more. But top line growth is no guarantee of higher profits if costs rise even more, something to watch right across the AI space.

Run your winners is good advice for long-term investors, as countless tech stocks have proven time and again. More cautious investors may decide that a average three year PE (price to earnings) multiple above 36 is a tempting exit point. Top slicing your stake to return your original investment while leaving the ‘profit’ invested is perhaps the sensible risk/reward balance to strike. 

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