On Tuesday, Oracle Corporation (NYSE:ORCL) received an optimistic update from Bernstein, as the firm raised its price target on the stock to $159 from the previous $147, while maintaining an Outperform rating. The adjustment follows Oracle's recent financial performance, which aligned with expectations regarding total revenue, primarily due to a notable achievement in its cloud and software segments.
The company not only met revenue expectations but also demonstrated a commendable improvement in operating margin. Oracle's forward-looking statements were particularly positive, providing solid revenue projections, including promising guidance for the fourth quarter, acceleration of growth for the fiscal year 2025, and reaffirmation of fiscal year 2026 targets.
These announcements have appeared to alleviate some growth concerns observed over the past two quarters, as evidenced by a 13% surge in the company's stock value during after-hours trading.
Oracle's management highlighted the success of its OCI Gen 2 infrastructure business, which reported a 52% increase within the quarter and is expected to continue its hypergrowth phase for the foreseeable future. While capital expenditures (CAPEX) for the third quarter were slightly lower than anticipated at $1.6 billion compared to $1 billion in the second quarter, management clarified that the actual figure for the quarter was $2.1 billion, attributing the discrepancy to timing.
Despite the lower full-year CAPEX projection, which is predicted to be around $7.0 to $7.5 billion rather than the initial $8 billion guidance, Oracle plans to significantly increase CAPEX in the fourth quarter and aims for a $10 billion investment in CAPEX for FY25. This strategic financial planning is seen as a response to Oracle's concern about meeting the robust demand with sufficient supply.
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