ETFs to Tap on Oracle's Strength
Oracle ORCL was a star performer in yesterday’s trading session, as the stock jumped more than 13% to a record high, following the robust third-quarter fiscal 2024 results. The rise represents the biggest one-day gain in more than two years. The software giant beat both earnings and revenue estimates, and provided an upbeat revenue guidance.
ORCL shares also received a boost from a potential agreement with AI chip giant Nvidia NVDA, which is expected to be announced next week at Nvidia’s GTC developer conference.
Investors seeking to tap the strength should consider ETFs having the largest exposure to this software giant. These include iShares Expanded Tech-Software Sector ETF IGV, Themes Cloud Computing ETF CLOD, Monarch Blue Chips Core ETF MBCC, Fidelity Cloud Computing ETF FCLD and Defiance Next Gen Connectivity ETF FIVG.
Oracle Earnings in Focus
The company’s earnings per share were $1.41, outpacing the Zacks Consensus Estimate of $1.37 and improving 16% from the year-ago earnings. Revenues rose 7% year over year to $13.28 billion but marginally outpaced the consensus estimate of $13.27 billion (see: all the Technology ETFs here).
Cloud revenues jumped 25% to $5.1 billion in the fiscal third quarter. Revenues from the two strategic cloud applications businesses, namely Fusion and NetSuite Cloud ERP applications, grew 18% and 21%, respectively. Oracle Fusion is the world's biggest cloud ERP business, whereas Oracle NetSuite is the second-biggest cloud ERP business.
Oracle saw a spike in bookings in its cloud computing business, which CEO Catz touted as a “large new cloud infrastructure” contract added by the company. Its Remaining Performance Obligations, a measure of the company's sales backlog, jumped 29% to a record $80 billion at the end of the fiscal third quarter, indicating strong revenue potential.
Catz expects to continue receiving large contracts reserving cloud infrastructure capacity because the demand for the Gen2 AI infrastructure substantially exceeds supply despite the opening of new cloud data centers and expanding existing ones rapidly. He expects 43% of the current $80 billion of Remaining Performance Obligations to be recognized as revenues over the next four quarters. He also anticipates the Gen2 Cloud Infrastructure business (which moved up 53% in the fiscal third quarter) to be in a hypergrowth phase for the foreseeable future.
For the fiscal fourth quarter, management expects revenue growth of 4-6%.
ETFs in Focus
Let us delve into each ETF below:
iShares Expanded Tech-Software Sector ETF (IGV)
iShares Expanded Tech-Software Sector ETF provides exposure to software companies in the technology and communication services sectors by tracking the S&P North American Expanded Technology Software Index. It holds a basket of 116 securities, with Oracle taking the third spot at 8.1% of the total assets (read: 5 Technology ETFs Outperforming XLK This Year).
iShares Expanded Tech-Software Sector ETF is popular, with an AUM of $7.4 billion. Its volume is good as it exchanges 3.4 million shares a day. IGV charges 41 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy), with a High risk outlook.
Themes Cloud Computing ETF (CLOD)
Themes Cloud Computing ETF seeks to track the Solactive Cloud Computing Index, which identifies the largest 50 companies by market capitalization that derive their revenues from digital security, e-commerce infrastructure, data infrastructure, data architecture, internet infrastructure and data support. It holds 55 stocks in its basket, with Oracle taking the second spot at a 5.2% share.
Themes Cloud Computing ETF has $1.3 million in its asset base and trades in a paltry volume of about 1,000 shares per day. The ETF charges 35 bps in annual fees.
Monarch Blue Chips Core ETF (MBCC)
Monarch Blue Chips Core ETF follows the Kingsview Blue Chips Core Index, which consists of established, well-recognized companies listed on the S&P 500 from a broad range of industries that demonstrate strength in the marketplace based on fundamental company data, such as revenues, revenue growth, net income and net income growth. It holds 24 stocks in its basket, with Oracle occupying the second position at 4.6% of the portfolio.
Monarch Blue Chips Core ETF has gathered $79.5 million in AUM and charges 1.25% in annual fees. It trades in a volume of 10,000 shares per day, on average.
Fidelity Cloud Computing ETF (FCLD)
Fidelity Cloud Computing ETF follows the Fidelity Cloud Computing Index, which reflects the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the delivery of computing services over the internet. It holds 60 stocks in its basket, with Oracle making up for the sixth firm and accounting for a 3.9% share (read: Cloud Computing ETFs at a 52-Week High: Here's Why).
Fidelity Cloud Computing ETF has managed assets worth $76.4 million and charges 39 bps in fees per year. It trades in a volume of 31,000 shares a day, on average.
Defiance Next Gen Connectivity ETF (FIVG)
Defiance Next Gen Connectivity ETF follows the Bluestar 5G Communications Index and offers investors access to 5G stocks — companies engaged in the research and development or commercialization of systems and materials used in 5G communications. It holds 49 stocks in its basket, with Oracle occupying the fifth position at 4.3%.
Defiance Next Gen Connectivity ETF has an AUM of $600.4 million and charges 30 bps in annual fees. It trades in a volume of 70,000 shares per day, on average. It has a Zacks ETF Rank #3 (Hold).
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
Defiance Next Gen Connectivity ETF (FIVG): ETF Research Reports
Monarch Blue Chips Core Index (MBCC): ETF Research Reports
Fidelity Cloud Computing ETF (FCLD): ETF Research Reports
Themes Cloud Computing ETF (CLOD): ETF Research Reports
