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What wouldn't we give to be able to turn back the clock and buy Envy, or rather, to when it was trading at 43 times its futures price, or when it was trading at 10 times its futures price? Or perhaps to do the same exercise again with Broadcom, which we discussed a couple of months ago, right after its previous quarterly results, and be able to buy it at approximately 130 times its futures price, 130 times at $130, and be able to sell it for almost 100%.
Well, in this video, we're going to talk about what I believe could be one of these companies, another huge opportunity coming to the market that the market isn't taking into account. And the truth is, when we analyze its latest quarterly results, which is the reason why it has fallen a bit, we'll understand why I say this.
But to do that, let's take a step back. Imagine you 're listening to someone talk about a huge company that has almost always stayed off the radar of social media, big investors, and big funds, but that is super important in the world of technology. Believe it or not, this company... When we talk about Oracle, we're talking about a company that for decades has been a pillar in the world of enterprise software, especially in what are called databases.
A database is like a large digital cabinet where companies store key information, from customer data and numbers to sales lists and transactions—everything they need to function. Oracle has dedicated itself to building, maintaining, and improving these digital cabinets, and also, obviously, other programs so that large companies, governments, and other organizations can manage their information securely and, above all, in an organized way, maximizing their time, maximizing production, and minimizing costs.
That has been their strength: helping these companies ensure their information flows smoothly, allowing them to analyze data, draw conclusions, make decisions based on numbers and not assumptions, and do all this. This might sound a bit unexciting, but the truth is, it's fundamental. Without companies like Oracle, it would be chaos for many organizations to keep track of their data.
Now, it's true that the world is changing with the arrival of AI. AI, or artificial intelligence, is this branch of technology that tries to make machines, so to speak, learn. They make decisions and improve over time, a bit like a human brain but based on patterns, data, and statistics. Oracle is benefiting from AI because its customers, other companies, need to compute, store, and process enormous amounts of information to train and run their artificial intelligence systems.
These systems don't exist in a vacuum; they need space, computing power, and programs to help them organize this data. That's where Oracle comes in again. Imagine a company wants to train an AI system that recognizes millions of images to offer personalized recommendations. That AI system needs servers; it needs a robust, fast, and reliable infrastructure.
Oracle offers this infrastructure through its cloud and AI-based tools. Furthermore, Oracle is developing solutions that incorporate AI so companies can analyze their data faster and find useful patterns without having to do all the work manually. For example, instead of an analyst spending weeks reviewing numbers, Oracle's AI can help them do it in hours or minutes, giving companies a huge competitive advantage.
Time is money, which is why the company is growing in this direction in AI because the future lies in this area. More data, more analysis, more automation, but let's talk a little about what happened recently. Despite Oracle having a spectacular year, its shares fell right after its quarterly results.
In fact, they reached double digits, not 6%. You might say, "Well, if Oracle was doing so well, if it's such a good company, why are the shares falling?" Well, this usually happens when a stock has risen a lot and market expectations are very high. Imagine you're flipping a coin, and suddenly—let's put it here—imagine you're flipping a coin and suddenly it lands on five heads.
Let's put it here and see if we can find one. You flip it five times and it lands on heads, heads, heads, heads. I'm missing one head. Okay, so if you're going to flip it five more times, what do you expect to happen? Well, obviously, if there's a 50% chance of heads and another 50% chance of tails, you can imagine it could be tails, tails, tails, tails, tails.
I've counted correctly. Okay, but it turns out that after two tails, or three tails, then another head comes up, and we thought it was going to be... If five tails came up, then when another head came up, we felt a little disappointed, more or less. I think I got a little confused with heads and tails because maybe I've included this.
This happens in the market. Oracle had said that it had more than doubled its value in both revenue and profit in recent years, and its shares rose by more than 100%. Agreed, more than doubled in the last year. If we take a look at 2024, boom! Here we start 2024. We're at approximately $100. It had reached almost $200.
Agreed, it rose a huge amount. So, when it rises so much, the markets expect incredible results. And although Oracle delivered and showed very solid numbers, when you expect perfection, even a good result can seem insufficient. Also, the earnings report mentioned that the heavy investments in AI infrastructure and development were going to increase expenses, which in the short term reduces net profit a bit because you have to include capex, you have to include expenses to continue storing this data and these cabinets.
Some analysts don't like this because they think, "I have to..." Waiting longer to see increases in profits causes some to sell their shares, leading to a drop in the price, and in my opinion, this gives us an excellent opportunity, as we were saying. This drop, in my opinion, doesn't mean Oracle is doing badly.
In fact, the last quarterly result, as we analyzed, showed that sales were growing quite a bit, that the cloud and the part of the company focused on infrastructure grew by more than 20%, which is truly impressive. I don't know if we'll be able to take a look at Oracle earnings, let's see if it's here.
Oracle Invest Relations Financials, we have it here. Oracle is here, and now let's see if it shows it to us. Fantastic earnings per share: 24. Earnings per share: Non-GP 10%, revenue 99%. Okay, those are futures contracts, the bonds. 97 minutes, 97 minutes, 97 billion dollars, 50%. Oh well, a quick look, but the truth is that the results were a little less than impressive, but for a company of its size, I mean, the bigger you are...
What's more complicated is growing so fast, especially in the long term. AI is just getting started, and Oracle is very well positioned to be a key player. Remember what we mentioned before: companies that want to use AI are going to need secure, fast, and efficient places to store and process their data.
Oracle offers exactly that. If you think about the future, perhaps this current low stock price can be seen as an opportunity. When a stock with future potential drops in price, it's like a discount in a store. So now might be a good opportunity to buy Oracle stock. Well, let's see. It depends on what you think is going to happen.
Obviously, with the future of AI, with the digital transformation of companies, with the global economy, with the Fed, with inflation, if you believe that the cloud, AI, and data storage are the future of Oracle, then it could easily be a very good long- term bet. I find it very interesting. One of the reasons is that Oracle isn't just a startup; it has a huge customer base, years of experience, proven products, and a very, very strong brand.
Also, while other companies are fighting over the world of artificial intelligence, well, you have Oracle, which is already there. And it's offering its customers—let me back this up— as you can see, the STW-TO-HEAD RO is super stable. As we were saying, it's offering its customers complete solutions, from the database to the cloud infrastructure, including analytics tools.
Another key point is AI, which it wo n't slow down, but quite the opposite, it will accelerate it. And from large companies, banks, insurance companies, hospitals, factories, governments, everyone needs to process data to make smarter and faster decisions. Oracle facilitates that process, which can mean many, many long-term contracts, as we saw earlier.
Well, indeed, the RPs were rising, uh, 50%, 49% year after year. Of course, investing in Oracle is not without risk. Certainly, death and taxes are risky. On the one hand, if the adoption of AI takes longer than expected, Oracle's growth could be slower. We could also be talking about other giant cloud companies like Amazon, Microsoft, or Google having a lot of strength and potentially stealing ground if they offer similar solutions at a better price or with new features.
If Oracle doesn't innovate quickly, it risks falling behind. Furthermore, currency fluctuations... The global economy and market changes obviously affect the value of companies. Oracle's advantage is that it's already an established firm, not a tiny startup that could disappear. But even so, as we know, death and taxes are certain.
The potential benefits of investing in Oracle, if all goes well, are considerable. Imagine if the company continues developing its cloud, improves its AI technology, and becomes one of the key partners for companies wanting to jump on the artificial intelligence bandwagon. That could mean increasing revenue year after year, which it has been doing for quite a few years, if I'm not mistaken.
Ah, bam, bam, bam, a bit of you, okay? We have the last negative year, which was in 2020, surprise menu, and after that, 2016, surprise menu. In 2023, it was growing by 17%. But as you can see, the average growth is 3%, okay, obviously. So this is telling us that each year, well, the growth of profits, well, net profits, so to speak, sometimes goes up, sometimes goes down, there we have it, okay?
This chart makes it look worse than it actually is because what we're seeing is a company that's growing, but growing somewhat irregularly. It has exponential growth, then it plateaus a bit, and then, obviously, we expect it to restart that growth, especially with AI. In my opinion, when these stocks fall, when the markets give us these opportunities for these great businesses with quite interesting valuations, one might think they have a much more reasonable entry point than when they were at their peak after a huge rise.
And considering that the valuations of other software and infrastructure companies with similar growth are much higher—Amazon, Google, Microsoft, Oracle—it could look cheap in comparison. This doesn't guarantee anything, but it's an interesting point to consider. The key is the time horizon. If you're looking for a quick profit, things might be more difficult because the company is currently investing in AI, spending more money—something similar to what happened with Meta—to create a solid foundation, and this might take some time to translate into huge profits.
But if you're thinking long- term about how companies in the The future will depend even more on cloud technology, intelligent databases, real-time information analysis, and AI-powered systems. Oracle can therefore have a privileged position, thinking globally. It trusts in the quality of its products and services, and in the number of giant companies that need the stability and security that Oracle brings.
It's also important not to be blinded by the enthusiasm for AI, which has already passed. While AI is a strong trend and is changing the way we work, consume, do business, and live, not all companies that claim to be involved in AI will succeed. It's necessary to see how well Oracle Supran executes, how it integrates AI into its products, how satisfied customers are with these solutions, and other factors.
It's important to keep an eye on it. If the execution is good and customers adopt its new offerings en masse, the potential is enormous. If there are problems— excessive costs and competition—the benefit won't be as great. The conclusion is that the recent drop in Oracle's stock price isn't necessarily a bad sign for the business; rather, it could be the market's natural response after a tremendous Sometimes, as we were saying, expectations for currencies skyrocket, and any result, even a good one, feels insufficient.
But the numbers, the potential of AI, and Oracle's solid market position suggest that the company has a very interesting path ahead. This could make the stock, at a slightly lower price today, a long-term investment opportunity. Obviously, no one can predict the future with certainty, but if you believe in the strength of AI, large-scale digital transformation, the need for companies to have reliable technology partners, the growth of the United States, and other factors, it presents itself as a very good name to keep in mind.
That said, ladies and gentlemen, also consider the short-term time horizon. Anything can happen; it could even fall to 140. God knows what could happen if higher inflation figures arrive and the Fed decides to stop cutting rates and start raising them, etc., etc. But focus less on Oracle's stock price—or rather, I like to focus on it—and more on the fundamentals.
If the fundamentals improve, the stock price falls—a golden opportunity. If the fundamentals worsen, the stock price rises— danger, danger. That said, as I always hope you've enjoyed this. Let me know in the comments if you liked Oracle, if you like this type of company, or if you prefer companies like Alibaba, which we analyzed a couple of days ago, which is also super interesting.
We also gave a brief overview of New Holdings and New Bank, which are also very interesting, and MercadoLibre. There are many companies, many interesting businesses. But in the end, there isn't one right portfolio and one wrong portfolio. There are two different people, two different portfolios, two different psychologies, two different attractions to risk, and two different expectations of profitability.
One wants more security, the other wants more risk. So, in the end, the decision has to be individual. But as always, we're here to try to help you and perhaps bring you companies we know but don't know that well, to shed some light on them. Let me know in the comments if you liked it, and if you'd like an analysis like this for another company.
As always, thank you very much. I hope you enjoyed it. If so, don't forget to hit the subscribe button, the bell icon, and the like button. Check the links in the video description. From the bottom of my heart, thank you. Thank you, have a fantastic day! We'll say goodbye wishing you all the best until the next video.
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