Trade Tracker: Bill Baruch Trims Oracle

Core Viewpoint - Rothschild and Company Redburn initiated a sell rating on Oracle with a target price of $175, arguing that the market overestimates the value of Oracle's contracted cloud revenues, suggesting a valuation of approximately $60 billion for Oracle's 5-year cloud revenue guide, indicating a risky scenario priced in by the market [1] Company Analysis - Oracle's stock is currently trading around $300, which reflects a significant premium over the target price set by Rothschild [1] - The stock has experienced a parabolic rise, increasing by 31.5% recently, which has raised concerns about its sustainability given the historical average multiple of 19 compared to the current multiple of 41 [3][10] - Analysts noted that Oracle's earnings report led to a rapid increase in market capitalization, with the stock adding 100 points in a short period, indicating a potential disconnect between stock performance and underlying fundamentals [6][7] Market Context - The discussion around Oracle's valuation is set against a backdrop of heightened volatility in the market, particularly in AI-related stocks, which are perceived to be driving growth but may also be contributing to inflated valuations [4][5] - There are concerns about the potential for a bubble in AI, although some analysts argue that current earnings growth supports the high valuations, contrasting with historical bubbles where earnings growth was absent [13][14] - The market is witnessing a mix of high volatility names that could be poised for downside reversion, with some analysts drawing parallels to past market extremes [19][20]