Oracle Is an Excellent AI Stock to Buy Right Now | ORCL Stock Analysis | Best AI Stocks to Buy

Oracle delivered quarterly Financial results that pleasantly surprised stock market investors indeed the stock price is up over 11% today I'm undoubtedly pleased as I've had Oracle stock rated as a buy all year long in 2024 Oracle is making a case for its position among the cloud leaders slotted behind Amazon Microsoft and Amazon in fourth place looking at new orders at Oracle investors can see a quickly Rising Trend I'll review oracle's latest results in this video and I'll update my buy recommendation of Oracle stock and let you know if I think it's a buy hold or a sell I want to thank the mly fool for sponsoring this video visit full.com parev for the 10 best stocks to buy now Oracle reported total quarterly revenues that were up 7% year-over-year to 13.3 billion cloud services Revenue were up 21% year-over-year this is where AI revenue is mostly housed q1 Gap operating income of 4 billion was up 14% And The company generated an operating margin of 30% in the order unsurprisingly Oracle stock is up 11.31% in the day following the earnings release as investors were impressed with the numbers coming out of this cloud service provider and on premise service provider investors are coming to the realization that Oracle is going to play a role a major role in the AI investment Trend now the number that was most impressive from Oracle in this quarterly release was RPO which stands for remaining performance obligations this was up 53% from last year to a record $99 billion now RPO eventually turns into Revenue these are new orders this is what I was talking about in the beginning of the video new orders are racking up quickly for Oracle and these eventually turn into revenue and so that strong contract backlog will increase Revenue growth throughout fiscal year 2025 for orgo and if the company continues racking up new orders like this the revenue growth could go well beyond 2025 which I suspect will be the case given the right ing demand for artificial intelligence for computing for artificial intelligence Oracle specializes or Oracle being used very much right now for the training of large language models that's happening a lot with Oracle and it's signing deals with a biggest cloud providers uh the biggest news of all was the multicloud agreement with AWS now AWS customers will get easy and convenient access to the Oracle database when they go live in December this year so Oracle making deals with the large Cloud providers because those providers don't see Oracle as a competitor oracle's not developing its own custom chips it's not developing its own AI model it's just offering the compute Services the data services to these providers and they don't mind partnering with Oracle because of that reason Oracle saying that their recently signed AWS contract was a milestone in the multi Cloud error soon customers will use the latest Oracle database technology within every hyperscalers cloud that means Amazon that means Microsoft that means alphabet they'll all be able to access oracle's database technology regardless of which one of those hyperscalers businesses are using now one of the things that Oracle stock investors should pay attention to is the company's balance sheet is not in as good a shape as the other hyp scalers like Amazon Microsoft and alphabet oracle's balance sheet is a little more heavily weighted towards debt the company has $75 billion in long-term debt compared to just $23 billion in current assets so the debt is large comparatively speaking but the company generates enough cash flow to support this debt it's not an issue right now it's just uh something to keep in mind here here something that should not be ignored for Oracle stock investors now I mentioned the company generates sufficient cash flow and in the latest 3 months which ended August 31st 2024 Oracle generated $7.4 billion in cash flow from operations that was up by roughly 500 million from the same time last year when it generated $6.9 billion in cash flow from operations and Oracle like the other hyperscalers is increasing capital expenditure they increased that by 1 billion year-over-year to 2.3 billion compared to the same time last year when they spent 1.3 billion oraco Chief technology officer said that they're looking to add data centers and they're building data centers which include clusters of Nvidia gpus and that is undoubtedly in response to customer orders that they're getting we already talked about their RPO how much demand they have come in and so to support that demand growth they're spending to build out more data centers because there's so much demand for these data centers I often hear investors question how much longer these hyperscalers will spend or increase spending on AI infrastructure on data centers and the answer to that question is they'll keep spending as long as they see these orders coming in RPO increased by 55% year-over-year so of course they're going to spend more to serve that kind of market demand they see orders coming in and if orders are coming in they don't mind spending to fulfill on those orders if they see those orders slowing down and they see a change in conversations with customers then they might say all right enough is enough we're not going to spend anymore because we see customer demand slowing down there isn't any evidence of that whether you look at Oracle alphabet Amazon Microsoft they're all seeing increasing orders for AI Cloud Computing Services and so they're all increasing Capital expenditures which of course the uh large percentage of that is going to Nvidia for its gpus and its technology not just gpus but the overall technology they are offering so this is something that uh Nvidia stock investors should certainly be happy about so following the increase in stock price Oracle now trading at a forward price to earnings of 21 and that's up from earlier in the year when it was trading at 16 this is when I was re I started recommending Oracle stock as a buy and it's increased however you are getting a lot more in Revenue in profitability in all of the critical metrics that you would like to see as an oracle investor you're getting more profits more cash flow increasing RPO and so investors are getting more in return for the price they're paying and I like to see that I don't mind prices increasing when they're justified by increasing fundamentals so to answer the question I posed in the headline is orgo stock a buy hold or a sell coming in remember I had it rated as a buy I last updated that on June 5th 2024 and I'll update that today on September 10th and reiterate my recommendation for Oracle stock as a buy did you know that over 90% of the people that watch my channel are not subscribed it'll really help support my channel if you hit that subscribe button and oh by the way one of the benefits of being subscribed is that I take requests from subscribers more often than I do from non-subscribers so if you prefer that benefit please 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