Oracle(US:ORCL) Zhi Tong Cai Jing·2025-06-17 13:11Core Viewpoint - Oracle's stock has surged 75% since April, driven by AI expectations, but it is now in a state of severe overbought conditions, raising concerns among investors about future performance [1][3]. Group 1: Stock Performance and Market Sentiment - Oracle's stock experienced its largest two-day gain since 2001 following the announcement of accelerated AI business revenue [1]. - The stock is currently at its highest valuation in over 20 years, with signs of market divergence as it faced a nearly 1% drop amid geopolitical tensions [1][3]. - Dan Morgan from Synovus Trust compares Oracle's potential in AI to Microsoft's strategic pivot to cloud computing a decade ago, suggesting that Oracle is in a growth phase with significant future potential [1]. Group 2: Financial Projections and Growth Potential - Oracle has heavily invested in cloud computing, and with the surge in AI service demand, it forecasts a significant increase in revenue growth for the upcoming fiscal year [3]. - Analysts predict Oracle's revenue growth will jump from 8.4% to 16% by fiscal year 2026, with net profit expected to rise by 15% [3]. - Despite trailing behind competitors like Amazon, Microsoft, and Google in cloud market share, Oracle's recent performance indicates strengthening capabilities in the AI sector [3]. Group 3: Valuation Metrics - Oracle's price-to-earnings (P/E) ratio has soared to 31, the highest since 2002, nearly double the average valuation over the past decade [5]. - HSBC's Stephen Bersey acknowledges that while the P/E ratio may seem high, the growth prospects justify this valuation, indicating Oracle's strategic positioning in the AI market [5].