Oracle retreats after record run towards US$1 trillion club on AI cloud boom
[NEW YORK] Oracle shares retreated on Thursday (Sep 11) after a record AI-driven surge in the previous session that put the company closer to the trillion-dollar mark and co-founder Larry Ellison within striking distance of the world’s richest person title.
The enterprise software maker’s remarkable rise, fuelled by a wave of multi-billion-dollar cloud deals, puts the spotlight on the scramble for computing power from companies that are pouring billions to become leaders in the AI race.
Oracle’s shares fell about 4 per cent after climbing as much as 35.9 per cent on Wednesday. The company’s market valuation rose to a record US$933 billion, as of last close, but is set to fall to around US$894 billion if losses hold.
Ellison’s net worth stood at around US$371.7 billion, largely driven by his 41 per cent stake in Oracle, compared with Tesla CEO Elon Musk’s US$441.2 billion fortune that tops Forbes’ global wealth rankings.
“A bit of buyer exhaustion here. I think the “buy the dip” crowd is likely to re-emerge,” said Dennis Dick, chief strategist at Stock Trader Network.
“The guidance was so incredible, hard to think that this story is over.”
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Oracle said on Tuesday its order backlog is on track to hit half a trillion US dollars in the coming months.
The Wall Street Journal also reported on Wednesday that OpenAI has signed a US$300 billion deal with Oracle for computing power, among the biggest in history.
Oracle’s stock has nearly doubled in value this year, making it among the top performers in the S&P 500 index, trouncing gains made by the so-called Magnificent Seven stocks.
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The median price target of US$342 represents an upside of around 9 per cent to the company’s stock price of US$314.45, according to LSEG data.
The shares were trading at a premium compared to its cloud services peers. Their 12-month forward price-to-earnings multiple was 45.3, compared with Amazon’s 31.3 and Microsoft’s 31. REUTERS
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