Oracle (NYSE:ORCL) is among the top AI and cloud computing companies that’s seeing incredible momentum of late. Now, it’s not Nvidia (NASDAQ:NVDA) like momentum. But up more than 30% year-to-date, with much of that upside taking place in recent weeks, it’s clear investors are jumping on this stock in a big way right now.
The company’s cloud revenue surged by 25% in 2024, driven by the company’s core cloud services business emphasizing its advantages in autonomous databases and AI computing.
This strategic shift reignited revenue growth, which has accelerated at an 8.5% clip over the past three years.
That’s enticing to investors, but the question many had heading into the company’s most recent earnings report was — can it continue?
Let’s dive into what Oracle reported, and why the stock is flying following its print.
ORCL Stock Surges After Q4 Earnings
Oracle missed on earnings and revenue during its fiscal fourth quarter, per numbers released earlier this week. One might initially think on those headlines alone, the stock would be down.
Quite the contrary. In fact, shares saw double-digit gains, as Oracle announced key partnerships with OpenAI and Microsoft (NASDAQ:MSFT) to advance its AI capabilities, an Alphabet (NASDAQ:GOOG) on the cloud front.
The company also noted strong forward guidance, given the company’s view that its cloud infrastructure business isn’t yet near full capacity.
In fact, the company expects sales to grow much faster in 2025, something that appears to have taken the market by surprise.
Perhaps most notably, the company said on its earnings call that growth should accelerate every quarter, as Oracle rushes to meet the incredibly high demand seen in the marketplace for its computing servers and storage business.
Can This Growth Continue?
That’s a rather bullish take on the market, but it’s one companies are touting across the board. Those in the cloud storage and computing markets are seeing incredible demand, and they simply don’t see an end in sight.
I’m sure at some point, things will slow down. Trees don’t grow to the sky. But given the collective demand our society has for more and more data, this is a secular tail wind that could really last a long time.
At least through 2025, Oracle sees strong demand on the horizon. That’s a recipe for outsized upside, though how much of this anticipation is baked in at current levels remains to be seen.
Bottom Line
I think Oracle is well-positioned to continue to take a share in the cloud computing and storage market. This is a sector that may have lost some luster relative to the AI trade, but these trends are all intertwined.
For those looking to gain exposure to what appears to be a relatively robust long-term growth runway, ORCL stock is one to consider right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.