We recently published Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely. In this article, we are going to take a look at where Oracle Corporation (NASDAQ:ORCL) stands against the other stocks Jim Cramer recommends to monitor closely.
On a recent episode of Mad Money, Jim Cramer emphasized the risks of straying too far from technology stocks, particularly the dominant tech companies, in today’s market. He pointed out how JP Morgan, despite being one of the best-performing banks, caused a stir by cutting its forecast, warning that estimates might be overly optimistic. This news hurt the broader market, dropping it by 93 points, although the S&P 500 saw a slight rise of 0.54%, and the tech-driven NASDAQ gained 0.84%.
“In this market, every time you stray too far from technology, especially the tech titans, you ultimately get slapped in the face by reality. That’s what happened today when the largest, and arguably best-performing, bank in the world, laid a huge egg with its forecast. They told us the estimates are too high, maybe way too high. That spoiled a big chunk of the market, ultimately dipping 93 points. The S&P inched up 0.54%, but the tech-heavy NASDAQ still gained 0.84%.”
Cramer explained that since the Federal Reserve gave positive signals, investors had shifted away from tech into other areas of the market. This shift was part of the “broadening out” that many investors had been waiting for, as it was believed to signal a healthier market. Financial stocks, which make up around 13.3% of the S&P 500, had been a source of excitement for those tired of relying on the leading tech stocks.
“For the past couple of months, ever since the Fed gave us the all-clear signal, we’ve seen money flow out of tech into long-neglected regions of the stock market. This is the fabled “broadening out” that people spent all year clamoring for. When we bring in more groups of winners, we’re supposed to have a much healthier market, at least that’s what they say. There are tons of financials in the S&P 500, about 13.3% of the index and the strength in those stocks was a source of much joy for everyone who had gotten sick of The Magnificent Seven.”
However, as Cramer noted, economic uncertainty and disappointing forecasts from bank companies disrupted this broader market strength. Daniel Pinto, the bank company’s COO, dashed hopes by signaling that the outlook for the bank wasn’t as strong as expected. The key issue was that net interest income, a critical measure for banks, was projected to miss expectations due to reduced capital market activity. For Cramer, this underperformance highlighted the danger of moving away from tech stocks too soon.
“But a funny thing happened on the way to that broadened-out market: we got economic choppiness. Or to use a more accurate phrase, we got guide-downs that were intolerable to any of the leaders, and the kiss of death to the stock of the bank. You can’t be a leader when you’re slashing your forecast for H2. That’s when the shareholders kick you to the curb and find someone new to follow.
But today, Daniel Pinto, the bank’s President and Chief Operating Officer, lowered the boom on the optimists who desperately wanted to buy something other than tech. The big bank told us that things are less bullish than we thought. There isn’t as much capital markets activity as we’d hoped this quarter, and most importantly, the estimates for next year are too high because of a likely miss on net interest income.”
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of IT professionals meticulously crafting a large-scale enterprise performance management system.
Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Investors: 93
Jim Cramer highlights Oracle Corporation (NASDAQ:ORCL)’s strength in the data center space, emphasizing that its centers have some of the most secure operations, the lowest costs, and minimal errors in the industry. This efficiency is achieved by automating operations, as Oracle Corporation (NASDAQ:ORCL)’s data centers are largely run by machines rather than humans, which helps eliminate mistakes. According to Cramer, this automation allows each data center to become more profitable as it grows, leading to higher earnings for the company. This performance was a key reason why Oracle Corporation (NASDAQ:ORCL)’s stock surged 11%, reflecting the market’s confidence in the company’s ability to drive significant growth in the technology sector.
“Oracle Corporation’s data centers boast some of the best security, lowest costs, and fewest mistakes. We know they won’t make mistakes because the company is staffing these monsters with nothing but machines. Each one will make more money, and the bigger they get, the higher the earnings will go. That’s why the stock shot up 11%. Technology up 11%!”
The optimistic outlook for Oracle Corporation (NASDAQ:ORCL) is based on its strong performance in cloud services, expanding AI capabilities, and strategic partnerships. In Q1 FY 2025, Oracle Corporation (NASDAQ:ORCL) exceeded expectations, with cloud revenue jumping 21% to $5.6 billion, and further growth is expected. A key development is Oracle Corporation (NASDAQ:ORCL)’s partnership with Amazon Web Services (AWS), which integrates Oracle Cloud Infrastructure (OCI) with AWS. This collaboration expands Oracle Corporation (NASDAQ:ORCL)’s presence in the cloud market by tapping into AWS’s large customer base.
Oracle Corporation (NASDAQ:ORCL) is also focusing more on AI-powered services like its HeatWave managed service for data analytics, positioning the company for long-term growth. With an 11% increase in its stock recently, contributing to a nearly 48% year-to-date gain, investor confidence in Oracle Corporation (NASDAQ:ORCL)’s future is strong. Oracle Corporation (NASDAQ:ORCL)’s leadership in enterprise software, combined with its ongoing advancements in cloud and AI, creates a strong case for continued growth.
Carillon Eagle Growth & Income Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q2 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) stock rose to all-time highs after the company announced better than expected cloud infrastructure revenue. Oracle signed dozens of new customers, including two leaders in generative artificial intelligence. The backlog remains, and strong growth appears poised to accelerate.”
Overall ORCL ranks 5th on our list of exclusive stocks Jim Cramer recommends to monitor closely. While we acknowledge the potential of ORCL as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ORCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
