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What Has Boosted Oracle Stock So Far in 2017?


Dec. 4 2020, Updated 10:50 a.m. ET

Oracle is one of the top 8 players in the cloud space

Previously in the series, we looked at the factors that led to Oracle (ORCL) stock’s lower rating by UBS. The increased adoption of cloud technology as it facilitates and adds to the dynamism of the current IT (information technology) environment has made it a crowded, competitive, and consolidated place. More than half of the cloud space is dominated by Amazon (AMZN), Microsoft (MSFT), Google (GOOG), and International Business Machines (IBM), with Amazon as the undisputed leader.

Although UBS is wary of Oracle’s transition to the cloud, Oracle has managed to achieve high growth rates consistently in this space. As the presentation below shows, Oracle has now made it to the top eight cloud providers.

Oracle’s cloud business grew to ~$4.6 billion in revenues in fiscal 2017, from $2.9 billion in fiscal 2016. In its fiscal 1Q18 results, Oracle’s total cloud revenues rose 51.4% to $1.5 billion with an annual run rate of $6 billion.

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Oracle stock performance compared to indexes

Oracle’s place in the cloud space has benefited the stock, which has rallied 26.5% in 2017 to date. UBS’s downgrading of Oracle stock to “neutral” weighed on the stock, which fell ~1.5% in the last month. In comparison, the SPDR Technology Select Sector ETF (XLK) has risen ~33%, while the technology-heavy S&P 500 (SPY) has risen ~17%. The S&P 500 index has hit new highs in the last couple of days on the back of increasing expectations of a tax reform bill.


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