Oracle Hit a Record High This Week. Here Are Its Charts

13 Sep

Oracle ORCL gained more than 10% to hit record highs this week after the cloud-based AI giant beat analysts’ earnings and revenue expectations and announced a deal to integrate its products with Amazon Web Services. What does ORCL’s fundamental and technical analysis say could happen next?

Let’s take a look:

Fundamental Analysis

Oracle reported after the bell Monday that it saw $1.39 in adjusted earnings per share on $13.307 billion of revenues in its fiscal Q1 ended Aug. 31. Adjusted EPS beat the Street's expectations by about a nickel, while revenues not only beat analysts’ consensus estimates, but were also good for 6.8% in year-over-year growth.

Other highlights included 53% year-over-year growth in Total Remaining Performance Obligations to $99 billion, a 45% y/y increase in IaaS Cloud Infrastructure Revenue to $2.2 billion and 21% y/y gains in IaaS + SaaS Cloud Revenue to $5.6 billion.

Meanwhile, perhaps even bigger than the earnings news was word that Oracle had signed a MultiCloud agreement with Amazon AMZN. Under the deal, Oracle will embed its Exadata hardware and Version 23ai database software into Amazon Web Services cloud datacenters.

This agreement will enable enterprise customers to connect data in their Oracle database to applications running on Amazon's cloud service. AWS customers in turn will get access to Oracle's database in September.

Oracle already signed a similar deal with Alphabet GOOGL GOOG in June covering the Google Cloud.

In other words, three of the nation's four largest cloud-services providers (Oracle, Amazon and Alphabet) are now working together. (The other large provider is Microsoft MSFT, which owns the Microsoft Azure cloud-computing platform.)

The Amazon deal and Oracle’s solid earnings sent ORCL shares up 14.1% as of midday Thursday from where the stock closed on Monday before the news broke. Shares are also up some 50% year to date in 2024, making Oracle one of the year’s best-performing large-cap tech stocks.

Technical Analysis

Now let’s look at Oracle’s technicals, beginning with its one-year chart as of midday on Tuesday (Sept. 10):

Readers will see a pattern in the above chart where for three straight quarters, Oracle reported earnings and/or other news that created a "gap-up" session the next trading day.

These gaps broke the stock out of periods of basing consolidation three times -- in March, June and again on Tuesday (Sept. 10). It's almost like a step ladder.

Can the stock hold on to its latest gap-up? Well, in both prior moves, the stock filled the gap ahead of its next earnings-reporting date.

Does that make sense to engage with Oracle’s latest gap, or is it more prudent to use history as a guide and wait to see if the stock fills its latest gap?

Mind you, Oracle previously has filled in gaps -- but over these past nine months, the stock has never broken through established support.

Oracle’s Relative Strength Index (the gray line at the top of the above chart) looks to be technically overbought as well. Over the past nine months, every one of those elevated RSI readings turned out to be a temporary sell signal.

That said, the daily Moving Average Convergence/Divergence indicator (or MACD, the gold and black lines at the bottom of the above chart) is slightly bullish.

The 12-Day Exponential Moving Average (the black line) is above the 26-Day Exponential Moving Average (the gold line). Meanwhile, the histogram for the 9-Day Exponential Moving Average (the blue bars at the bottom of the chart) is ever so slightly above zero.

Historically, that combination looks a bit positive, but also seems almost cautious. The moves seem less pronounced, and not as sharp.

Next, let's throw an Andrews' Pitchfork model onto Oracle’s chart and see if we can't smooth out the stock’s price action for the less trained eye:

Tracing the pitchfork back to Oracle’s October low and running it through the present, we find that almost everything in between has been part of a trend.

If the pitchfork is to continue as it has, then ORCL tried to crack the upper trendline of the model (the highest of the five “pitchfork” lines shaded in gray). However, the stock was quickly forced back down into that upper chamber.

Does that mean the most recent gap will fill? If the past serves as guide and if the trend has its way, that seems likely.

(Disclosure: At the time of this writing, Moomoo Markets Commentator Stephen Guilfoyle was long AMZN.)

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