Oracle Leads Tech Stocks Higher Amid Renewed AI Frenzy

Cloud computing giant Oracle posted astonishing demand numbers for its services thanks to AI demand, pushing the stock to its best performance in decades, but leaving some traders worried about parallels with the dot-com boom.

The Latest Developments

• Oracle earnings on Tuesday shocked markets, with the stock having its best performance in over three decades.
• The company reported a 359% increase in orders for its AI infrastructure offerings, helping reassure markets that the AI tech frenzy still has legs.
• The jump in Oracle's stock brought back memories of the dot-com bubble, as analysts worry about high valuations and tech companies now having a 37% weighting in US stocks.

Oracle's Projected Growth Shocks Markets

After the market closed on Tuesday, Oracle presented its fiscal Q2 earnings that beat expectations. But what really got investor attention was that the company (or backlog), a whopping 359% increase from a year earlier. For comparison, analysts had projected that this item would still be high at $180 billion. The company's share price rocketed up 36% on the next trading day, making its CEO and largest shareholder, Larry Ellison, briefly the wealthiest man in the world, surpassing Elon Musk, after his personal fortune grew by $100 billion in a single day.

Oracle has been one of the biggest winners of the AI boom, as various businesses build out AI infrastructure and increase their demand for cloud computing. Oracle competes with other cloud providers, such as Microsoft, Amazon, and Google, who have also seen a strong demand for their services. However, Oracle's growth is faster than its rivals', underscoring its.

Is It All Uphill From Here?

While the market cheered Oracle's results, allowing US indices, including the in the aftermath of the company's earnings, some analysts have expressed concerns. Remaining Performance Obligations (RPO) are for future orders, and there could be several intervening factors before Oracle can translate that into actual revenue. Oracle is facing similar supply issues as its rivals in building out cloud infrastructure to meet customer demand.

Others are using Oracle as an example to address the market more broadly, following the company's largest single-day gains since 1992 and its role as a significant player in the dot-com boom and bust., the highest percentage ever, and even higher than during the 2000 "" bubble. Outside the US, the level is 11%, the highest in four years. The surge in tech valuations has driven the Nasdaq higher but suggests a high reliance on mega-cap tech names. This could make the market vulnerable to correction if it fails to meet increasingly higher expectations.

The Nasdaq Is Challenging New Highs

The US tech-weighted index has been trending higher all week but has yet to overcome the psychologically important 24k level. Despite recent gains, the RSI has not yet entered overbought territory, reinforcing the theory that it could continue to rise due to Fed rate cuts, potentially reaching levels of 24250 and 24500. On the other hand, if the resistance holds firm and the divergence plays through, the Nasdaq could be setting up a double top. A downward move could encounter support at the lower Bollinger Band of 23680, which is near the close after Friday's disappointing NFP numbers. A break below could expose 23500 and the 23k handle.

Source: SpreadEx | US Tech 100, 4H.