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GenAI Excitement Spreads to More Stocks

June 15, 2024

Only when you look at long-term charts like this one (each candlestick = 6M) can you see the power of the latest chart breakout? This key index is off and running. All you have to do as an investor is believe the message that US technology shares are headed much higher.

Oracle Shares and Fundamentals in Great Shape

This chart is reminiscent of the Microsoft chart. There is an explosive rise, followed by an extended consolidation, a breakout, and a renewed rise on a shallower trajectory. Oracle floated in the same year as Microsoft and was another hero of the desktop computer revolution. It has prospered since then but may now see renewed vigour thanks to GenAI, where the company expects to be heavily involved.

“In Q3 and Q4, Oracle signed the largest sales contracts in our history—driven by enormous demand for training AI large language models in the Oracle Cloud,” said Oracle CEO, Safra Catz. “These record level sales drove RPO [remaining performance obligations] up 44pc to $98bn. Throughout fiscal year 2025, I expect continued strong AI demand to push Oracle sales and RPO even higher—and result in double-digit revenue growth this fiscal year. I also expect that each successive quarter should grow faster than the previous quarter—as OCI [Oracle Cloud Infrastructure] capacity begins to catch up with demand. In Q4 alone, Oracle signed over 30 AI sales contracts totaling more than $12.5bn—including one with Open AI to train ChatGPT in the Oracle Cloud.”
“Our multicloud cooperation with Microsoft expanded significantly in Q4, as we agreed to work together to support Open AI and ChatGPT—and 11 of the 23 OCI datacentres we are building inside Azure went live,” said Oracle Chairman and CTO [chief technology officer] , Larry Ellison. “As this Azure/OCI cloud capacity becomes available to the large installed base of Microsoft and Oracle customers, it will turbocharge our cloud database growth. Now customers can run any and every version of the Oracle database—Autonomous, 23ai Vector DB, etc.— in both the Azure and the Oracle Clouds. As customers continue to choose and use multiple clouds, Hyperscalers like Microsoft and Google are responding by interconnecting their clouds. Oracle recently signed an agreement with Google to interconnect our clouds—and initially build 12 OCI datacentres inside the Google Cloud. We expect the Oracle database to be available within the Google Cloud in September this year.”

Oracle Q4 2024 results, 11 June 2024

Strategy – GenAI Boom Still in the Foothills of an Explosion

That is a weird metaphor I know but you get the idea. It’s all happening guys and girls as a certain late and unlamented British DJ might have said. The more these big guns start to fire the better the prospects for the stock market.

The media is obsessed with elections on both sides of the Atlantic and they are shaping up as entertaining as a spectator sport. My children cannot believe that after voting for Brexit I am now planning the disgrace of voting for a Farage-led Reform UK party.

This is tactical voting. I am part of what I suspect is a country-wide plot to bring about a Canadian-style extinction-level event for the Tories. I want them back again but not these soft soap guys, I want Tories red in tooth and claw, ready to take a chainsaw to government departments and CUT taxes.

Imagine a party led by me, with a pledge to cut at least one major tax every year. Would they get my vote? Would they ever? Would they get a lot of people’s votes? I believe they would and right across the spectrum. Not everybody who votes Labour is on the take to put it brutally. Most people want to work and to keep most of their pay packet. Let’s have a political party for them.

Welfare is fine as is immigration but everything in moderation and let’s try to reward success, not despise it.

Apologies for that but I am irritated by my children’s patronising assumption that because they are young and I am old they are right. As a heroine in a Georgette Heyer novel might have said, referencing the widespread assumption in the Regency period that men were wise and women were idiots – ‘they much mistake the matter’.

Back to the stock market. I am not sure that in an era of GenAi and accelerating technological change politics matters much anymore. These guys can huff and puff but Jensen Huang is a hundred times more important than Rishi Sunak, let alone the patron saint of bland, Keir Starmer. Send Starmer to speak in a stadium in Taiwan, or anywhere, and see how many people, if any, turned up. Voters like Farage because at least he is not boring.

The bottom line of all this ranting is that I don’t see the election results making any noticeable difference to the trend in stock markets.

Share Recommendations

Oracle. ORCL. Buy @ $138

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