We recently published Jim Cramer’s exclusive list: 10 stocks to watch closelyIn this article, we’ll take a look at how Oracle Corporation (NASDAQ:ORCL) compares to the other stocks Jim Cramer recommends keeping a close eye on.
In a recent episode of Mad Money, Jim Cramer highlighted the risks of straying too far from technology stocks, particularly the dominant technology companies, in today’s market. He pointed out that JP Morgan, despite being one of the best-performing banks, made waves by lowering its forecast and warning that estimates may be too optimistic. That news hurt the broader market, sending it down 93 points, although the S&P 500 posted a slight increase of 0.54% and the tech-driven NASDAQ gained 0.84%.
“In this market, if you get too far away from technology, especially the tech giants, you end up being hit by reality. That’s what happened today when the largest and arguably best-performing bank in the world missed its forecast by a huge margin. They told us the estimates were too high, maybe way too high. That spoiled a big part of the market, which ended up down 93 points. The S&P rose 0.54%, but the tech-heavy NASDAQ still gained 0.84%.”
Cramer explained that since the Federal Reserve’s positive signals, investors have been moving away from technology stocks and into other areas of the market. This shift was part of the “widening out” that many investors had been waiting for, as it was seen as a sign of a healthier market. Financials, which make up about 13.3% of the S&P 500, have been a source of excitement for those tired of relying on the leading technology stocks.
“In recent months, since the Fed gave us the all-clear, we’ve seen money flow out of the technology sector and into long-neglected areas of the stock market. This is the fabled ‘widening out’ that people have been crying out for all year. If we introduce more winners, we should have a much healthier market, or so they say. There are tons of financials in the S&P 500, about 13.3% of the index, and the strength of these stocks has been a source of great joy for anyone who’s tired of the Magnificent Seven.”
However, as Cramer noted, this overall market strength was disrupted by economic uncertainty and disappointing forecasts from banks. Daniel Pinto, the bank’s COO, dashed any hopes by stating that the bank’s outlook was not as good as expected. The main problem was that net interest income, a key metric for banks, was expected to fall short of expectations due to reduced capital market activity. For Cramer, this underperformance highlighted the danger of turning away from technology stocks too early.
“But a funny thing happened along the way to this broader market: we experienced economic turmoil. Or, to be more precise, we experienced downtrends that were unbearable for all the leaders and the death knell for the bank’s stock. You can’t be a leader if you drastically lower your forecast for the second half of the year. Then shareholders push you out and look for someone new to follow.
But today, Daniel Pinto, the bank’s president and chief operating officer, put a damper on the optimists who were eager to buy something other than technology. The major bank told us that things were less optimistic than we thought. There was not as much activity in the capital markets this quarter as hoped and, above all, estimates for next year were too high, with net interest income likely not being met.”
At Insider Monkey, we are obsessed with the stocks that hedge funds invest in. The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (Further details can be found here).
A team of IT experts carefully develops a comprehensive performance management system for companies.
Oracle Corporation (NASDAQ:ORCL)
Number of hedge fund investors: 93
Jim Cramer highlights Oracle Corporation’s (NASDAQ:ORCL) strength in the data center space, stressing that its centers have some of the most secure operations, lowest costs, and lowest error rates in the industry. This efficiency is achieved through the automation of operations, as Oracle Corporation’s (NASDAQ:ORCL) data centers are mostly run by machines rather than humans, which helps eliminate errors. According to Cramer, this automation allows each data center to become more profitable as it grows, resulting in higher returns for the company. This performance was a major reason Oracle Corporation’s (NASDAQ:ORCL) stock rose 11%, reflecting the market’s confidence in the company’s ability to drive significant growth in the technology sector.
“Oracle Corporation’s data centers have the best security, the lowest costs, and the fewest errors. We know they don’t make mistakes because the company only staffs these monsters with machines. Each one will make more money, and the bigger they get, the bigger the profits will be. That’s why the stock is up 11%. Technology up 11%!”
The bullish outlook for Oracle Corporation (NASDAQ:ORCL) is based on its strong performance in cloud services, expansion of AI capabilities, and strategic partnerships. In the first quarter of fiscal 2025, Oracle Corporation (NASDAQ:ORCL) exceeded expectations, with cloud revenue increasing 21% to $5.6 billion and further growth 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’s (NASDAQ:ORCL) presence in the cloud market by tapping into AWS’s large customer base.
Oracle Corporation (NASDAQ:ORCL) is also increasing its focus on AI-powered services, such as its HeatWave managed data analytics service, positioning the company for long-term growth. With shares up 11% recently and up nearly 48% year-to-date, investor confidence in Oracle Corporation’s (NASDAQ:ORCL) future is strong. Oracle Corporation’s (NASDAQ:ORCL) leadership in enterprise software combined with ongoing advances in cloud and AI make a strong case for continued growth.
Carillon Eagle Growth & Income Fund stated the following about Oracle Corporation (NYSE:ORCL) in its second quarter 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) rose to an all-time high after the company reported better-than-expected cloud infrastructure revenue. Oracle added dozens of new customers, including two leaders in generative artificial intelligence. The backlog remains strong and strong growth appears to be accelerating.”
Total ORCL 5th place on our list of exclusive stocks that Jim Cramer recommends for close monitoring. While we recognize ORCL’s potential as an investment, we believe that AI stocks that fly under the radar promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than ORCL but trades at less than five times its earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
