[The Oracle Has Spoken] Why this Company is About to Get Bigger, Faster

This company has a blow-out quarter and sends the market higher. Picks from the Editor SPONSORED (Newsletter Continues Below) Sponsored [Build Wealth 10x Faster By Doing This]( As you know, the stock market has been volatile lately, and there's a lot of uncertainty in the air. But we want to assure you that this is not the time to panic. In fact, it's the time to be buying stocks.[Go HERE to Get Their Names And Ticker Symbols]( By clicking the link you are subscribing to the Summa Money Newsletter and may receive up to 2 additional free bonus subscriptions. Unsubscribing is easy [Privacy Policy/Disclosures]( The Voice of Oracle: Witness the Soaring Growth of the AI Cloud  Hi Traders,  Oracle's CEO, Safra Catz, recently dropped a comment worth its weight in gold. "Both of our two strategic cloud businesses are getting bigger—and growing faster," she noted, adding the enticing prospect of a strong FY24.  The truth is, this isn't just good news for Oracle; it's good news for the entire tech sphere. Here's why: the AI revolution is a big player in this growth story.  To paraphrase an old saying, 'home is where your AI is' – in this case, home is the cloud. It's the only arena with enough muscle to handle the monstrous data loads that AI demands.  Simply put, Oracle's recent report was a slam dunk that rivaled NVIDIA’s, pushing its stock into high gear.  This suggests a bright future for tech stocks and may well be the magic wand that lifts the S&P 500 to new heights over the summer.  So, let's talk about Oracle's Q4 results. To call it solid would be an understatement - it was a home run, folks.  With a net revenue of $13.84 billion, they marked a 17% increase from the previous year, not just reaching but surpassing Marketbeat.com's consensus estimate by 80 basis points. All this while managing to nab a better margin than expected.  However, let's not ignore the elephant in the room - the mixed results in some segments. While Cloud Services and License Support saw a 23% YoY rise, Cloud License and Off-Premise License dipped by 15%.  But let's focus on the positives, shall we?  It's worth noting that the drop was due to the legacy businesses. On the flip side, the growth segments were nothing short of spectacular.  For instance, within the Cloud Services and License Support segment, the cloud segment grew by a whopping 54%, propelled by IaaS. The IaaS revenue grew by 76%, SaaS revenue by 44%, and Fusion ERP and NetSuite by 26% and 22%, respectively.  As Oracle's Chairman and CTO, Larry Ellison, aptly puts it, "Oracle's Gen2 Cloud has quickly become the number 1 choice for running Generative AI workloads."  Why is this the case?  According to Ellison, it's because Oracle owns "the highest performance, lowest cost GPU cluster technology in the world." The fact that NVIDIA is using Oracle's clusters for their AI infrastructure only underscores this.  The profits are soaring too.  Both gross and operating margins have expanded, pushing the adjusted EPS to $1.67, a 27% rise from the previous 17%.  Not too shabby for a company that doesn't issue guidance, wouldn't you say? The future looks promising too, with Ellison stating that over 35 AI development firms have signed contracts for future cloud capacity.  The result?  Analysts are gushing over Oracle's cloud business like bees over honey, leading to an increase in market activity. Following the Q4 release, the market is on track for an impressive rally in the near term.  A chorus of eleven analysts chimed in with price targets above consensus within the first 18 hours of release. While consensus sits near $110, the range of new targets is between $130 and $150.  So, a minimum of 12% upside could be on the horizon, in addition to the post-release surge.  Like every good thing in life, though, there's always a bit of a catch. The upward price action can't last forever, and resistance is bound to kick in at some point.  For those eyeing an entry point into Oracle, beware of the risks of whipsaws and pullbacks. That being said, confirmed support following pullbacks could offer promising entry points.  The long-term prospects, bolstered by the growth of AI and the cloud, look rosy for Oracle. The icing on the cake is the company's sustainable dividend, dividend growth, and share repurchases.  While the current yield stands at about 1.35%, it holds a healthy growth outlook.  Moreover, Oracle is only paying 28% of the F24 consensus estimate, which is a conservative estimate, and has been consistently increasing dividends for eight years, a winning streak I wouldn't mind having on my investment portfolio.  All in all, Oracle seems to be holding the right cards for an exciting game in the tech sector.  Keep on keeping up!  John @ Traders on Trend  (In the next article: Can the US Fed really afford to pause raising interet rates? 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Unsubscribing is easy [Privacy Policy/Disclosures]( Check the Free Presentation Today ☝ SPONSORED Can the Federal Reserve Manage a Temporary Halt in Interest Rate Hikes?  Once upon a time, back in March 2022, the Federal Reserve decided to put the pedal to the metal, tightening monetary policy with a certain urgency.  This move got the economic forecasters buzzing, with many predicting an imminent recession.  And why wouldn't they?  History seemed to agree, and the falling index of leading economic indicators, along with a severely inverted treasury yield curve, all seemed to be pointing toward a downturn.  Now, despite these somber predictions, our trusty friend, the labor market, hasn't lost its nerve. Unemployment is chilling at a comfy 3.7%, close to a 50-year low, and April saw the creation of 339,000 jobs.  I mean, talk about resilience! Moreover, the job vacancy rate is looking quite healthy, with a surplus of 1.5 jobs for every unemployed individual, and consumer confidence is like a well-seasoned rock climber, ascending for 8 of the last 10 months.  However, it's not all sunshine and rainbows, as GDP growth did hit a bit of a speed bump in the last two quarters. Yet, with an annualized growth rate of 1.6%, it's not doing too shabby compared to the end of 2022.  So, what does this mishmash of economic cues mean for the Federal Reserve? Well, to say it's a head-scratcher would be an understatement.  As the June FOMC meeting looms, the million-dollar question is: "Is inflation now tamed enough for the Fed to take a breather on rate hikes?"  If we look at the CPI inflation rate, a key economic thermometer, we see it simmering just below 5%, the tamest it's been in the past year.  Moreover, the average monthly inflation rate over the last six months has been a modest 0.3%, which translates to an annualized rate of 3.3%.  (article continues below) Sponsored [This Trade Has Paid Out 99.1%]( We’ve made THIS simple trade over and over again… for years. The result? It’s cashed in winning trades 99.1% of the time. We call it the “310F Trade.” Getting into this “rinse and repeat” trade each Tuesday… could double your money by Friday. Sound too good to be true?[See how we’ve done it, week after week...for YEARS]( [Privacy Policy/Disclosures]( SPONSORED  🔼 Pay attention, this is worth your time! ☝  (article continues)  Now, these numbers are quite promising, showcasing a continued downward trend in inflation. The upcoming Tuesday's CPI numbers for the previous month will be crucial in showing whether this trend persists.  Now, within the walls of the Fed, opinions are split.  On one side, we have folks like Fed Chair Jerome Powell advocating for a pause, stating their belief that the impact of the current monetary tightening measures will continue to pull down inflation and decelerate economic growth.  On the other hand, we have individuals like Cleveland Fed President Loretta Mester who see no compelling reason to hold back on the rate hike at the next meeting, given the current inflation rate.  Enter Fed Governor and Vice Chair nominee Philip Jefferson with a compromise: why not just skip the next rate hike and see how things pan out?  On the surface, it sounds like a reasonable approach. However, it's a strategy that the Fed must approach cautiously.  Firstly, despite the positive direction of inflation, the core inflation rate remains above 5%. This means that unless the Fed has some secret tools to justify why the inflation is lower than what the headline numbers suggest, they can't ignore that it's well over their 2% target.  Secondly, monetary policy guidelines like the Taylor Rule, which leverage SPF and Federal Reserve forecasts, suggest that we are still between 50 and 200 basis points away from the optimal Federal Funds Rate.  Thirdly, monetary policy is like a good rhythm; it works best when it's systematic and predictable.  An orderly tightening cycle followed by a steady normalization of rates typically does the trick. A "skip and see" approach can throw a wrench in the works by setting the wrong expectations.  If the Fed opts to pause their interest rate hikes at the upcoming FOMC meeting, it's critical that they clearly communicate the circumstances under which they'll resume.  Transparency is key to keeping inflation expectations in check and avoiding any unpleasant surprises that could put a dent in the Fed's credibility to maintain price stability.  Without this transparency, the dream of a soft landing could quickly turn into a nightmare of continued inflation, something the Fed is keen to avoid.  Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. 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