We recently published a list of Jim Cramer’s Top 10 Must-Watch Stocks for Savvy Investors. In this article, we are going to take a look at where Oracle Corporation (NASDAQ:ORCL) stands against Jim Cramer’s must-watch stocks for savvy investors.
Friday Madness
In a recent episode of Mad Money, Jim Cramer described September 6, Friday, as a dismal trading day following a critical non-farm payrolls report. Bulls hoped for weaker-than-expected hiring and steady wages to prompt the Federal Reserve to consider cutting rates. They got what they wished for, but this led to a surprising turn of events: instead of rallying, the market saw a sharp decline, with the Dow falling 410 points, the S&P dropping 1.73%, and the NASDAQ plummeting 2.55%.
“What an ugly day. Just hideous. We came into today knowing we’d have a critical non-farm payrolls report. If you were a bull, you wanted to see weaker-than-expected hiring with wages pretty much in line, because that’s what the Fed needs to see before it can start cutting rates. Voila, we got exactly what we wished for. Maybe we should have been careful, though, because as soon as we got what we wanted, the bulls vanished and the sellers came out of the woodwork, crushing practically everything. The Dow fell 410 points, the S&P plunged 1.73%, and the NASDAQ plummeted 2.55%.”
Cramer noted that September often brings significant profit-taking, making it historically the weakest month for the market. While this might seem like circular reasoning, it’s more plausible than suggesting that fear of a severe economic slowdown drives the sell-off. In fact, big tech companies, which are central to ongoing powerful trends like data centers and accelerated computing, should be seen as buying opportunities during market dips.
“This market has a September problem. Come September, we’re always hit with a tremendous amount of profit-taking, which is why it’s the weakest month of the year. I know that’s somewhat circular reasoning—we sell because we’ve always sold—but it makes more sense than saying people sold tech because they fear a hard landing. Tech, especially big tech, is something you buy, not sell, into weakness if you’re worried about a more severe slowdown.
Why? Well, because big tech is all about powerful secular themes that can keep going even during a recession—and we’re not getting one. I’m talking about the data center, accelerated computing—they’re not going anywhere. Nevertheless, when anything jars the big tech themes of the moment, the market’s reaction is swift, harsh, and horrible.”
Jim Cramer discussed the aftermath of NVIDIA’s recent report, noting that despite his belief that AI is not a bubble, the stocks related to AI have seen substantial gains, particularly in August. He pointed out that September often triggers increased selling, even when companies report results that meet expectations.
“Look at what happened after the company reported last night. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers.”
The Upcoming Debate Between Harris and Trump
Jim Cramer also commented on the upcoming debate between Vice President Harris and former President Trump, scheduled for Tuesday night. He questioned how much the economy will be a focus, speculating that Trump might try to link Harris to recent inflation trends, while Harris may present herself as a more moderate alternative to President Biden.
“Tuesday night’s the great debate between Vice President Harris and former President Trump. I don’t know how much of a role the economy will play in the debate. If Trump’s on his game, he’ll try to tie Harris to the inflation we’ve experienced since COVID. I suspect that Harris will try to portray herself as more moderate than President Biden.
Either way, I doubt there’ll be anything specifically market-moving, even if the candidates say something newsworthy about their tax plans. Keep in mind that the winner in November likely won’t have the Senate votes to totally rework the tax code, whether we’re talking about Harris’s capital gains tax or Trump’s 19th-century-style tariffs.”
Jim Cramer Urges Investors: “Please Do Not Give Up the Ship Here”
Then he discussed the upcoming release of the Consumer Price Index (CPI) on Wednesday, which will provide another update on inflation. He emphasized that if inflation remains steady or decreases, the Federal Reserve will have more flexibility to lower interest rates and potentially avoid a recession, addressing concerns from many sellers. Cramer urged investors to stay confident and not to abandon their positions based on these uncertainties.
“Wednesday, we get another read on inflation—this time from the Consumer Price Index. What can I say? As long as inflation stays the same or goes lower, the Fed has plenty of leeway to cut interest rates and prevent a recession—the thing so many sellers are worried about. That’s why I keep telling you, please do not give up the ship here.”
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Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Investors: 93
Jim Cramer highlights that Oracle Corporation (NASDAQ:ORCL) has successfully reinvented itself by adding a strong AI component to its existing enterprise software business. He notes that Oracle Corporation (NASDAQ:ORCL)’s performance has been exceptional in recent quarters and believes the company will continue this trend. Cramer suggests that Oracle Corporation (NASDAQ:ORCL) could play a significant role in stabilizing the tech sector.
“Oracle has reinvented itself with an AI kicker to go with its regular enterprise software business. As of last quarter, it’s been performing exceptionally well, and I think they’re going to do it again. Oracle Corporation (NASDAQ:ORCL) could stop the tech blood flow.”
Oracle Corporation (NASDAQ:ORCL) is well-positioned for growth, particularly due to its strong performance in cloud infrastructure amid rising AI demand. Oracle Corporation (NASDAQ:ORCL)’s Oracle Cloud Infrastructure (OCI) is a key asset, attracting major clients such as NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and OpenAI. OCI’s ability to efficiently train large language models at lower costs gives Oracle a significant edge in the competitive AI market.
Moreover, Oracle Corporation (NASDAQ:ORCL)’s autonomous database systems improve efficiency and reduce costs for its clients. Looking ahead to Q1 2025, Oracle Corporation (NASDAQ:ORCL) is projected to see a 6% increase in revenue, reaching approximately $13.23 billion, driven mainly by its cloud services. Oracle Corporation (NASDAQ:ORCL) expects OCI to grow by over 50% year-over-year in fiscal 2025, reflecting strong demand for its AI-related offerings.
Additionally, Oracle Corporation (NASDAQ:ORCL)’s performance obligations have surged by 44%, suggesting a healthy future revenue pipeline. Despite a high debt load, Oracle Corporation (NASDAQ:ORCL)’s aggressive expansion in cloud infrastructure and its ambitious goal of $65 billion in revenue by 2026 provides a positive outlook. Although Oracle Corporation (NASDAQ:ORCL) has gained more than 35% this year and valuation concerns exist, analysts remain confident in the continued strong demand for Oracle’s cloud solutions, making it an attractive investment.
Ariel Focus Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q2 2024 investor letter:
“Global leader in enterprise software, Oracle Corporation (NYSE:ORCL), was the top contributor to relative performance in the period. ORCL is benefitting from a significant expansion in artificial intelligence (AI) demand and strong booking growth with OpenAI. We believe these results highlight ORCL’s ability to effectively cross-sell and upsell apps and infrastructure, as well as the emergence of the company’s cloud platform as a competitive offering.
In addition, ORCL announced a meaningful partnership with Google Cloud mirroring its existing partnership with Microsoft Azure. The company’s ability to leverage the services of both companies without having to rewrite the application helps differentiate and improve ORCL’s positioning in the database market. Furthermore, management provided strong guidance for fiscal 2025, including a double-digit increase in total revenue, with growth accelerating throughout the year.”
Overall ORCL ranks 3rd on our list of Jim Cramer’s must-watch stocks for savvy investors. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
