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On Tuesday, Cantor Fitzgerald reaffirmed its Overweight rating on Oracle Corporation (NYSE:ORCL) shares, highlighting the tech giant's growing presence in the cloud sector. With a substantial market capitalization of $368 billion and impressive annual revenue of $55.78 billion, Oracle stands as a prominent player in the software industry. According to InvestingPro data, the company maintains a robust gross profit margin of 71.12%, demonstrating strong operational efficiency. Despite being categorized as a tier 3 cloud provider behind the likes of Azure, AWS (tier 1), and GCP (tier 2), Oracle is gradually capturing more opportunities beyond its traditional application and customer base.
Oracle's foray into the cloud has been met with optimism, particularly for its GPU resources and aggressive discounting strategy. While the company's cloud deals have predominantly been with its existing install base, Oracle has been actively extending service incentives to attract new customers outside its ecosystem. Recent InvestingPro analysis indicates the stock is currently trading below its Fair Value, suggesting potential upside opportunity despite a challenging six-month period that saw a 26.73% decline. These incentives often involve covering the costs of partner or Oracle's own services needed for onboarding and implementing its Oracle Cloud Infrastructure (OCI).
The strategy also includes bundling OCI services, which has increased Oracle's presence in requests for proposals (RFPs). According to industry partners, this approach is enabling Oracle to incrementally secure deals that might otherwise have gone to the larger cloud service providers like AWS, Azure, and GCP.
Oracle's discounting tactics are a key part of its strategy to bring new customers into the fold. Partners report that the discounts are applied by paying for necessary partner services or Oracle's native services that facilitate the adoption of OCI. This method, combined with the bundling of OCI services, is helping Oracle to become more competitive in the cloud marketplace.
The company's steady progress in the cloud sector, as noted by the industry checks, is a sign of Oracle's commitment to expanding its reach and capabilities in this increasingly important field. Despite the competition, Oracle's strategic moves are showing potential to disrupt the current cloud hierarchy over time. With an EBITDA of $22.92 billion and consistent dividend payments for 17 consecutive years, Oracle demonstrates financial stability amid its expansion efforts. For deeper insights into Oracle's financial health and growth prospects, including 13 additional ProTips and comprehensive valuation metrics, explore the full analysis available on InvestingPro.
In other recent news, Oracle Corporation has received multiple affirmations from investment firms regarding its stock ratings and price targets. TD Cowen reaffirmed a Buy rating with a $210 price target, highlighting Oracle's strong demand in cloud infrastructure and artificial intelligence. Piper Sandler maintained an Overweight rating with a $190 target, noting Oracle's significant investments in AI data centers and a substantial increase in cloud Revenue Performance Obligations. KeyBanc Capital Markets also sustained its Overweight rating, setting a $200 price target, and emphasized Oracle's strategic focus on AI at the hyperscale level.
Meanwhile, developments continue regarding the sale of ByteDance's U.S. assets of TikTok. President Donald Trump extended the deadline for the sale, citing progress in negotiations and expressing a desire to prevent TikTok from going offline. Discussions involve increasing stakes by major non-Chinese investors in ByteDance, with private equity firm Blackstone (NYSE:BX) considering a minor investment. President Trump has been in contact with several groups about a potential deal, though specific buyers have not been disclosed.
These recent developments reflect ongoing strategic maneuvers by Oracle and ByteDance, with significant implications for investors monitoring both companies.
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