Oracle’s (ORCL-N) shares retreated on Thursday after a record AI-driven surge in the previous session that brought the company closer to the trillion-dollar mark and put co-founder Larry Ellison within striking distance of the world’s richest person title.
The enterprise software maker’s remarkable rise, fueled by a wave of multi-billion-dollar cloud deals, puts the spotlight on the scramble for computing power from companies that are pouring billions to become leaders in the AI race.
Oracle’s shares fell nearly 5 per cent after climbing as much as 35.9 per cent on Wednesday. The company’s market valuation rose to a record US$933-billion, as of last close, but is set to fall to around US$890-billion if losses hold.
Ellison’s net worth was at around US$387.6-billion, largely driven by his 41-per-cent stake in Oracle, compared with Tesla CEO Elon Musk’s US$437.5-billion fortune that still tops Forbes’ global wealth rankings.
“A bit of buyer exhaustion here. I think the “buy the dip” crowd is likely to re-emerge,” said Dennis Dick, chief strategist at Stock Trader Network.
“The guidance was so incredible, hard to think that this story is over.”
At US$312.44, Oracle’s stock is trading about 9 per cent lower than the median price target of US$342, according to LSEG data.
The Wall Street Journal also reported on Wednesday that OpenAI has signed a US$300-billion deal with Oracle for computing power, among the biggest in history, likely accounting for the bulk of the new revenue Oracle outlined on Tuesday.
The stock has nearly doubled in value this year, making it among the top performers in the S&P 500 index, trouncing gains made by the so-called Magnificent Seven stocks.
Oracle’s shares were trading at a premium compared to its cloud services peers. Their 12-month forward price-to-earnings multiple was 45.3, compared to Amazon’s 31.3 and Microsoft’s 31.
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