- Summary:
- Oracle stock price has been trading sideways in the last seven sessions. However, its fundamentals and baseline signal an impending breakout.
Oracle stock price was up by 0.9 percent in the pre-market session on Wednesday, staying on course to register the first successive daily gains in three weeks. Oracle has been range-bound for the last seven trading sessions, largely underperforming its tech market peers like Meta, Microsoft and Alphabet. This is partly attributable to the company’s outlier status as earnings calls propel its peers.
Oracle’s strong baseline and fundamentals to provide tailwinds
Despite trading sideways for a prolonged period, Oracle’s strong fundamentals offer a strong foundation upon which its stock price could break out. The company won’t announce its earnings until December 9, but its investments and order book signal a likely strong show. Oracle has invested heavily in cloud computing, a centerpiece in the AI revolution.
Data centres are invaluable to the growth of the AI industry, as LLM training and deployment require gigantic storage capacities, of which cloud infrastructure is purpose-built to handle. Oracle (NYSE: ORCL) currently has 160 cloud infrastructure centres and intends to build more, including one to be set up in Malaysia in November.
The company’s strong Free Cash Flow, which came in at $5.1 billion in the first quarter, means that it is able to fund its capital expenditure without straining its resources or accumulating debt. It signed a milestone $12.5 billion Oracle Cloud Infrastructure deals in the quarter ending June, including one with Microsoft-backed OpenAI. In addition, it has locked up similar deals with both US and UK departments of defence.
As tech companies and enterprises expand their AI budgets, Oracle is positioned to leverage the increased to grow its revenue and improve its margins substantially. That will provide tailwinds for Oracle share price.
Oracle share price forecast
Oracle share price pivots at 174.35, and the buyers will be in control if they keep action above that level. That will likely meet the first resistance at 175.00, but an extended bullish control could breach that mark and test the second resistance at 175.50.
Conversely, moving below 174.35 will signal the onset of control by the sellers. Initial support will likely come at 173.80, but that mark could be broken if the sellers extend their control. If that happens, the upside narrative will be invalid, and the price could go on to test the second support at 173.30.
