Patrick Walravens, a Citizens JMP analyst, joined CNBC’s ‘Squawk on the Street’ to provide his perspective on Oracle’s (ORCL) recent quarterly earnings. Despite Oracle missing both top and bottom line expectations, Walravens remains optimistic about the company’s future, maintaining an outperform price target of $205, approximately 17.5% higher from the ticker’s last $174.60 print. He addressed the bearish sentiment by emphasizing Oracle’s advantageous position in the AI infrastructure market, particularly in hosting GPUs, which he claims is unmatched. He cited Oracle’s recent deal with Meta (META) as evidence of its strong market position.
Walravens cautioned against overreacting to Oracle’s misses, noting that the company has underperformed on the top line in six of the last eight quarters yet continues to thrive, with Larry Ellison still being one of the richest individuals globally. He suggests that the key metric to watch for Oracle is the Remaining Performance Obligation (RPO), which represents contracts signed for future AI-related services. Although RPO decreased in the latest quarter after four consecutive increases, Walravens believes this will trend upward again, as indicated by CEO Safra Catz during the earnings call.
Regarding the broader implications of AI spending, Walravens pointed out the expected volatility in AI infrastructure demand as the industry shifts from model training to model inference. He referenced his son’s view, a data scientist, that the job landscape could dramatically change with AI agents performing tasks currently done by humans. This transition, he predicts, will lead to an uneven demand curve for GPUs and related infrastructure.
When asked about the sustainability of GPU demand once AI models are more focused on inference rather than training, Walravens shared an amusing anecdote about consulting ChatGPT, which suggested a 5 to 10-year horizon for continued demand. He also leaned on Oracle’s CEO, Larry Ellison’s commentary from the earnings call, highlighting numerous use cases for AI inference, suggesting that we’re only at the beginning of this technological shift.
In conclusion, Walravens advocates buying Oracle stock on the current dip, confident that the company is well-positioned to capitalize on the evolving AI market. His perspective is that the world is undergoing significant changes due to AI, changes that will continue to drive demand for Oracle’s services.
Disclaimer: The information provided is for informational purposes only and does not constitute financial, investment, or trading advice. Trading stocks/crypto involves significant risk, and past performance is not indicative of future results. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.
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