Oracle saw its stock rise by 7% last week, mirroring the broader market which advanced by 3%. The company's recent collaboration with Sphere to utilize Oracle Database 23ai on the Oracle Autonomous Database could have bolstered investor confidence, enhancing perceptions of Oracle's capabilities in AI-driven workflow automation. Meanwhile, widespread optimism in the broader tech sector, highlighted by strong earnings from major tech giants like Microsoft and Meta, certainly supported the surge in Oracle's share price. The overall positive sentiment from the market's focus on AI investment likely amplified Oracle's upward trajectory.

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The collaboration between Oracle and Sphere to leverage Oracle Database 23ai is expected to further enhance Oracle's AI-driven capabilities, potentially leading to increased demand for their cloud services. This development aligns with Oracle's wider strategy of expanding its cloud power capacity and multi-cloud partnerships with giants like AWS, Google, and Azure. Such initiatives are anticipated to accelerate future revenue growth, especially in AI training and database migration, thus boosting Oracle's earnings forecasts. Analysts predict substantial growth in Oracle's revenue and earnings due to these efforts, with strong performance obligations reflected in a US$130 billion increase.

Over the past five years, Oracle's total shareholder return, including share price gains and dividends, was 192.19%. This demonstrates significant long-term growth. In the past year, Oracle's stock exceeded the US Software industry's return of 10.8%, reflecting its robust market performance. Despite the substantial return, the recent price surge has yet to align fully with the consensus price target of US$178.12. Oracle's current price of US$140.79 indicates potential upward movement as investor confidence grows around its AI capabilities and market position.

Insights from our recent valuation report point to the potential undervaluation of Oracle shares in the market.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NYSE:ORCL.

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