Oracle (ORCL) reported earnings and gained the 3rd most market cap of a company in a single day. Today, we review the strength of both Oracle and different groups within technology
Fewer than forty companies have a market cap above $245 billion, but Oracle (ORCL) rose 36% on Wednesday to add that much in a single day after reporting earnings the prior evening. ORCL saw the third-largest single day increase in value of all time, sitting behind only Nvidia’s two best days in 2024. As a result, Oracle is now the tenth-largest company in the US, overtaking both J.P. Morgan (JPM) and Walmart (WMT). Meanwhile, founder Larry Ellison surpassed Elon Musk to become the richest person, with his net worth rising by ~$100 billion.
Movement Wednesday saw ORCL break a double top at $260 and reaching an intraday high above $336. The 5 for 5'er shifted up from a 4 in June after reversing into a column of Xs against the market and has been on a market RS buy signal since 2020. Trough to peak, the stock is up roughly 170%, an impressive move for a stock with a market cap this large. However, ORCL now sits in heavily overbought territory, so wait for the 10-week trading band to normalize before considering.
Although revenue for ORCL came in slightly below expectations, the bullish sentiment from investors can be traced to the company's optimistic revenue outlook for its Oracle Cloud Infrastructure (OCI) business line, which offers cloud computing services for large companies. Oracle announced that it signed four multibillion-dollar contracts with three large customers in the previous quarter, with the expectation of signing additional multibillion-dollar contracts in the future, resulting in a 359% increase in its contract backlog. This new demand for ORCL's OCI services, driven largely by huge AI players needing cost-efficient and reliable computing services, is expected to increase the company's (projected) revenue of $18B in 2026 to $144B by 2030, a compounded increase of 68% year-over-year.
The success of Oracle served as another sign of confidence in the broader technology space, with the Technology Select Sector SPDR Fund (XLK) gaining 1.8% on the day—the most of any major sector. As mentioned in today’s featured article, tech has surged recently as AI enthusiasm continues. However, not all areas of the sector have benefited equally. Areas focused more on infrastructure for AI development and training, such as semiconductors and cloud computing, have been relatively stronger. The table below shows the fund score and performance of funds for different subsectors within technology, with the VanEck Semiconductor (SMH) and First Trust Cloud Computing (SKYY) ETFs holding fund scores above that of the broader sector (XLK). Meanwhile, technology companies focused more on the implementation of AI, such as software and cybersecurity companies, are lagging the broader sector in strength. The technology sector as a whole continues to look strong, but securities involved in AI infrastructure hold the lead for now, with the ascent from Oracle serving as the most recent example.
