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Oracle Beats Earnings & Apple Hits a Record-High on Monday

Plus500 | Tuesday 13 June 2023

While the prospect of Mondays may be tiresome and dull to many people, Monday, June 12th, was certainly eventful, at least for the markets. Yesterday, American multinational tech and software giant Oracle (ORCL) rose 6% to mark its best day in a year while tech behemoth, Apple (AAPL) reached a record high for the first time in over a year. Amidst the economic hurdles ranging from inflation to recession fears and uncertainty regarding interest rate levels, what could have pushed these two companies upward? Here are Monday, June 12th, market movers:

An image of a rising stock chart

Oracle’s Earnings Surprise

On Monday, June 12th, software and tech company, Oracle, reported its fiscal Q4 earnings following which its shares gained 6%. It seems that Oracle reported better-than-expected financial figures and provided rosy Q1 forecasts as well. 

Whereas some analysts expected it to report adjusted earnings per share (EPS) of $1.58, Oracle reported an EPS of $1.67. It also reported a revenue of $13.84 billion which is well above the market’s prediction of $13.74, meaning that its revenue grew by 17% YoY.  Its net income was also positive as it came in at $3.32 billion vs. the year-ago’s quarter whereby it came in at $3.19 billion. 

Many seem to attribute these positive results to the company’s cloud infrastructure which according to some “is expanding faster than Microsoft and Google,” thus reaching $4.4 billion in revenue and growing by 54%. Apparently, in the fourth quarter, Oracle’s cloud services were seeing heightened demand from companies using AI. 

Oracle also partnered last year with GPU leader, NVIDIA (NVDA), in a deal that was said to “help customers solve business challenges with accelerated computing and AI.” Through this deal, Oracle would be able to make NVIDIA’s microchips and AI software available to its clients through its cloud applications. 

Furthermore, in addition to its partnership with NVIDIA, Oracle also partnered with Cerner, an American health information technology company last year. This partnership is believed to have increased Oracle’s prowess in the face of giants like Microsoft and Amazon (AMZN)

Accordingly, the fruits of last year’s labors may have been reflected in Oracle’s Q4 earnings reports and analysts believe that the company is likely to grow further through its partnership with NVIDIA to even become a leader in artificial intelligence and machine learning.

What May Lie on Oracle’s Horizon?

While the future cannot be determined, and certainly not when it comes to the volatile markets, Oracle’s CEO seems to be positive about the company’s growth in Q1. According to CEO, Safra Catz, the company’s gross margin will likely keep growing and she expects fiscal Q1’s adjusted EPS to range between $1.12 to $1.16 and a revenue growth of about 8% to 10%. 

Oracle’s Chair and Technology Chief, Larry Ellison, also revealed that the company will continue investing in AI technology through its cloud services with Cohere. Additionally, Oracle also revealed during the quarter that many of its cloud applications have been approved by the US defense and intelligence agencies. All in all, since the beginning of this year, Oracle soared by over 39%, and it would be interesting to see if it would be able to sustain these gains in the near future. (Source:CNBC)

Apple’s Stellar Monday

Monday was also kind to iPhone maker and tech leader, Apple, whereby the company gained 1.5% and reached its highest level since January 2022, perhaps raising the question of whether big tech companies have been able to rise from the ashes of layoffs and inflation pressures. 

These highs come a week after Apple’s huge WWDC 2023 conference, whereby the company unveiled its Vision Pro headset, an entirely new product in about nine years. While the reasons behind Monday’s high are not entirely clear, experts point to the fact that Apple’s VR Headset may hold a promising future. This is because they predict that the $3,499 headset can be a groundbreaking product for the company. Apple even stated that this headset will “make new types of games possible” and referred to it as the “first spatial computer.” 

In addition, newer and bigger MacBook laptops, new desktops, and updated iPhones, iPads, and Apple Watches were announced. 

Nonetheless, despite Monday’s optimism, it may be worth noting that Apple’s iPhone sales were a tad sluggish in the past six months and its market capitalization is not at a record high due to the fact that the company bought back some of its shares in May. As of the time of the writing, the company’s market capitalization is about $2.89 trillion and it rose by about 26.4% since the start of the year whereas its competitors like Alphabet (GOOG) and Microsoft rose by 38.6% and 38.5% respectively. 

In conclusion, while Monday may have provided some traders and investors with much-needed reassurance, it is important to keep in mind the fact that markets can be ever-changing. In addition, many events like this week’s Federal Reserve interest rate decision which is set to be reported on Wednesday, June 14th, and the US CPI release which is due today, Tuesday, can affect the trajectory of the markets. Traders will have to see what else is hidden in store this week to determine where the aforementioned stocks may be headed.

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