Can the IT stock really rise to $150 US dollars?

Last Updated: 4. Januar 2024By

You are familiar with the motto „buy on bad news“. But before you take action, you should clarify how bad the news really is. This also applies to Oracle.

The US company is one of the world’s leading providers of software and hardware solutions. Oracle focuses on the development, production, marketing, and distribution of database and middleware software solutions, application software, and computer hardware, including servers and storage systems.

Missed revenue expectations For the second quarter (fiscal year), the company reported a revenue of $12.94 billion, which was slightly below the average analyst expectations of $13.05 billion. The cloud-based software company reported an adjusted net profit of $3.76 billion for the second quarter, just above the estimates of $3.74 billion.

CEO remains positive despite missed expectations „The demand for our cloud infrastructure and generative (artificial intelligence) services is growing at an astronomical pace,“ said Chief Executive Safra Catz. „Our cloud business now has an annual revenue of nearly $20 billion, and the demand for cloud services continues to grow at an unprecedented rate.“

Stock increase of up to 50% in the last year In the last year, Oracle’s stock has gained over 50%. Investors had bet that the increasing spread of generative AI, the technology behind the popular chatbot ChatGPT, will drive the growth of companies that offer data center services. However, Oracle is far from its 52-week high of $126.

Can Oracle reach $150? Conclusion: After missing expectations, the stock has fallen sharply, as you can see from the chart. The sentiment among analysts is also rather mediocre. 17 out of 34 analysts recommend buying, 16 want to hold, and one analyst believes that selling would be a good idea. The average analyst price target is $126, the previous 52-week high. Some analysts even see potential for the stock to reach $150. And indeed, with a P/E ratio of 18, the IT stock cannot be considered expensive. If you base the earnings estimate for 2025, you only get a P/E ratio of 16.4.