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Time to Buy the Rally in Oracle's (ORCL) Stock After Earnings?

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Oracle (ORCL - Free Report)  shares have soared over +10% in today’s trading session after the cloud provider was able to exceed top and bottom line expectations for its fiscal first quarter on Monday evening.

As one of the top-performing tech stocks this year, ORCL has risen nearly +50% YTD and investors may be wondering if they should buy into the post-earnings rally.

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Oracle’s Q1 Results

Cloud infrastructure revenue growth was the main catalyst for Oracle’s strong Q1 results. This includes high-performance artificial intelligence applications that are run on Remote Direct Memory Access (RDMA) through its partnership with Nvidia (NVDA - Free Report) .

Overall, Oracle’s Q1 sales rose 7% year over year to $13.3 billion and edged estimates of $13.21 billion. On the bottom line, earnings of $1.39 per share beat expectations by 5% and spiked 17% from Q1 EPS of $1.19 a year ago.

Oracle also announced a new partnership with Amazon (AMZN - Free Report)  that will allow customers to access its databases within Amazon Web Services (AWS).

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Revenue Guidance & Growth Trajectory

For the second quarter, Oracle expects 8%-10% sales growth which fell in line with the Zacks Consensus of $14.01 billion in sales or 8% growth (Current Qtr below).

Based on Zacks estimates, Oracle’s total sales are expected to increase 9% in its current fiscal 2025 to $57.82 billion versus $52.96 billion in FY24. Furthermore, FY26 sales are projected to rise another 11% to $64.02 billion.

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Even better, Oracle’s annual earnings are forecasted to be up 11% in FY25 and are slated to jump another 13% in FY26 to $6.98 per share.

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Valuation Comparison

Trading around $155, Oracle’s stock is at a 22.6X forward earnings multiple which is slightly beneath the S&P 500’s 23X and a pleasant discount to its Zacks Computer-Software Industry average of 33.6X.

Oracle also trades at a discount to the forward P/E valuations of some of its iconic tech partners with Nvidia and Amazon trading at 38X and 36.9X forward earnings respectively.

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Bottom Line

Following its Q2 report Oracle’s stock sports a Zacks Rank #2 (Buy). To that point, lucrative partnerships continue to expand Oracle’s presence as a cloud provider with now appearing to be a good time to buy ORCL as the company continues to reconfirm its attractive growth trajectory.


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