ETFs
Focus on ETFs following Oracle’s fourth quarter results – June 12, 2024
Oracle (ORCL quick quoteORCL – Free report) reported weak results for the fourth quarter of fiscal 2024, missing both profit and revenue estimates. However, its shares rose more than 9% after market hours on strong bookings and a strong revenue outlook for fiscal 2025, indicating strong demand for its AI-based cloud services .
Investors looking to exploit this strength should consider ETFs with the greatest exposure to this software giant. These include ETF Pacer Data and the digital revolution (Quick quote TRFKTRFK – Free report) , iShares ETF for the broad technology software sector (Quick quote IGVIGV – Free report) , Fidelity Cloud Computing ETF (Quick quote FCLDFCLD – Free report) , First Trust Innovation Leaders ETFs (Quick quote ILDRILDR – Free report) And Cloud Computing ETF Themes (Quick quote CLODCLOD OF EARTH – Free report) .
Focus on Oracle results
The company’s earnings per share were $1.63, missing the Zacks Consensus Estimate by a penny and down from year-ago earnings of $1.67. Revenue rose 3% year-over-year to $14.3 billion, but fell short of the $14.55 billion estimate (see: all technology ETFs here).
Outstanding performance bonds, the most popular measure of future contracted sales, jumped 44% to $98 billion in the fourth quarter.
Oracle signed the largest sales deals in its history during the fiscal third and fourth quarters, driven by huge demand for training large AI language models in Oracle Cloud. In the fourth quarter alone, the software company signed more than 30 AI sales deals totaling more than $12.5 billion, including one with Open AI to form ChatGPT in Oracle Cloud.
Oracle CEO Safra Catz expects continued strong demand for AI through fiscal 2025 to push Oracle’s sales even higher, resulting in double-digit revenue growth. Growth in each successive quarter is expected to accelerate compared to the previous quarter, as cloud unit capacity begins to catch up with demand. Catz said on the conference call that the cloud infrastructure unit will see growth of more than 50% in the current fiscal year.
Oracle announced broad cloud infrastructure deals with Microsoft (MSFT Quick QuoteMSFT – Free report), OpenAI and Google (Quick quote GOOGLGOOGLE – Free report) to extend its own cloud infrastructure to customers. This will help the software company to be more competitive in the cloud computing sector (read: Can technology ETFs continue their winning momentum?).
The company expects first-quarter revenue growth of 5% to 7% and earnings per share of $1.31 to $1.35.
Focus on ETFs
Let’s take a look at each ETF below:
Pacer Data and Digital Revolution ETF (TRFK Quick QuoteTRFK – Free report)
The Pacer Data and Digital Revolution ETF aims to provide investors with exposure to globally listed stocks and depositary receipts of data and digital revolution companies. It tracks the Pacer Data Transmission and Communication Revolution Index, holding 79 stocks in its basket. Oracle is in third place, accounting for 10% of assets.
The Pacer Data and Digital Revolution ETF has accumulated $31 million in its asset base and charges 60 basis points in annual fees. It trades with an average daily volume of 12,000 shares.
iShares Expanded Tech-Software Sector ETF (IGV Quick QuoteIGV – Free report)
The iShares Expanded Tech-Software Sector ETF provides exposure to software companies in the technology and communications services sectors by tracking the S&P North American Expanded Technology Software Index. It holds a basket of 114 stocks, with Oracle in second place with 8.6% of total assets.
The iShares Expanded Tech-Software Sector ETF is popular, with $5.8 billion in assets under management. Its volume is good as it trades 4 million shares per day. IGV charges 41 basis points in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a High Risk outlook.
Fidelity Cloud Computing ETF (FCLD Quick QuoteFCLD – Free report)
The Fidelity Cloud Computing ETF tracks the Fidelity Cloud Computing Index, which reflects the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the provision of computer services over the Internet. It holds 59 stocks in its basket, with Oracle being the top company and accounting for a 5.3% share.
Fidelity Cloud Computing ETF has managed assets worth $76.1 million and charges 39 basis points in fees per year. It trades on average in a volume of 21,000 shares per day (read: Is it time to opt for cloud ETFs on strong earnings and promising growth?).
First Trust Innovation Leaders ETF (ILDR Quick QuoteILDR – Free report)
The First Trust Innovation Leaders ETF is an actively managed ETF that seeks to provide exposure to companies that stand to benefit from the development or application of scientific and technological innovation. It holds 63 stocks in its basket, with Oracle in fourth place with a 5.6% share.
The First Trust Innovation Leaders ETF has $29.1 million in assets and trades a paltry volume of about 5,000 shares per day. The ETF charges 76 basis points in annual fees.
Cloud Computing ETF Themes (CLOD Quick QuoteCLOD OF EARTH – Free report)
The Themes Cloud Computing ETF seeks to track the Solactive Cloud Computing Index, which identifies the 50 largest companies by market capitalization that derive revenue from digital security, e-commerce infrastructure, data infrastructure, data architecture, Internet infrastructure and data support. It holds 51 stocks in its basket, with Oracle in sixth place with a 4.6% share.
The Themes Cloud Computing ETF has $1.3 million in assets and trades a paltry volume of about 1,000 shares per day. The ETF charges 35 basis points in annual fees.