Oracle shares rose 6% in premarket trading on Friday after stronger-than-expected quarterly results and an upbeat outlook helped ease investor concerns over the cloud computing company’s debt-funded artificial intelligence spending.

The enterprise software giant reported first-quarter revenue of $19.35 billion, ahead of the $19.14 billion consensus estimate from LSEG.

Net income reached $4.7 billion, up 60% from $2.93 billion a year earlier.

The results offered investors fresh evidence that Oracle’s aggressive investment in AI infrastructure is beginning to translate into stronger cloud growth and future revenue visibility.

Overall, analysts saw the results as a positive step for Oracle, with stronger growth and bookings outweighing concerns over its heavy spending.

The key risks remain margins, capital intensity and the pace at which its $664 billion backlog converts into revenue.

Cloud growth accelerates

Oracle’s cloud business remained the main driver of the quarter.

Cloud revenue climbed 62% year over year to $11.6 billion, while cloud infrastructure revenue surged 121%. Cloud application revenue increased 10%.

The company also signed more than $30 billion in additional AI cloud contracts during the quarter, lifting its revenue backlog, measured through remaining performance obligations, to $664 billion.

That was above analysts’ estimate of $639.89 billion, according to Visible Alpha.

Oracle’s RPO increased by $26 billion from the previous quarter, with management saying much of the backlog is expected to convert into revenue over the next 36 months.

The company attributed the increase to demand for AI cloud training and inference services continuing to grow faster than its ability to supply capacity.

Oracle expects second-quarter revenue to increase between 30% and 34%, with cloud revenue forecast to grow 64% to 70%.

For fiscal 2027, the company now expects revenue of “at least $90 billion”, compared with its previous outlook of $90 billion.

It also raised its adjusted earnings-per-share forecast for fiscal 2027 to $8.10 from $8.05.

Data center execution eases concerns

Oracle’s results come after months of investor scrutiny over whether its enormous AI infrastructure investments would generate sufficient returns.

The company has been spending heavily to expand data centers and cloud capacity while taking on debt and raising capital to fund the buildout.

That has put pressure on cash flow and fueled concerns about its ability to finance continued expansion.

The stock has lost about 22% this year.

For the August quarter, Oracle reported capital expenditure of $28.5 billion, significantly above the $19.23 billion analysts had expected.

However, the company also reported that 850 megawatts of AI compute capacity came online during the quarter, three times the amount delivered in the entire fourth quarter.

J.P. Morgan analysts led by Samik Chatterjee said the results addressed several investor concerns, including the sustainability of backlog growth, its conversion into revenue amid data-center delays and the possibility of further capital raises.

“We got both better in-period execution and future-period bookings than anticipated. Check and check,” analysts led by Jackson Ader at KeyBanc Capital Markets said.

They noted that the 850 megawatts of capacity coming online pushed back against concerns that delays to data-center projects could affect near-term revenue recognition.

Analysts turn more positive

Several analysts responded positively to the results, with Citi reiterating its Buy rating and saying Oracle had “cleared the runway” for its upcoming Investor Day.

“Oracle delivered a solid fiscal first quarter that checked nearly every box and reinforces the bull case heading into Investor Day,” the analysts said.

Citi described Oracle’s fiscal 2027 outlook as “modest” and management’s framework as “conservative”, arguing that the scale of the first-quarter outperformance could leave room for upward revisions.

“Given the magnitude of fiscal first-quarter outperformance, we see a favorable setup for upward revisions at Investor Day and AI World,” the analysts added.

Barclays also raised its price target to $252 from $250 while maintaining an Overweight rating.

That is a 65% upside from Thursday’s close.

The firm said investors could be ready to reassess Oracle following the earnings report as growth momentum improves and financing uncertainty eases.

“The company’s growth inflected and should continue to accelerate from here,” Barclays said in a research note cited by TheFly.

Barclays also highlighted Oracle’s completion of its $20 billion at-the-market equity offering, which it said reduced uncertainty over how the company will fund its expansion.

Scotiabank maintained its Outperform rating, while Citizens analyst Patrick Walravens reiterated a Market Outperform rating and a $285 price target.

Margin pressure remains a concern

Not all analysts were entirely bullish.

Morgan Stanley analysts led by Sanjit Singh pointed to pressure on Oracle’s gross margin and the relatively modest increase in its fiscal 2027 earnings guidance.

The analysts said investors would want to see further stabilization in gross margins and more clarity on when new data centers will become operational.

Oracle’s analyst day, expected in late October, could provide those details.

Stifel analyst Brad Reback lowered the firm’s price target to $200 from $220 while maintaining a Buy rating.

Reback called the quarter “a strong quarter” and highlighted Oracle’s decision to raise its fiscal 2027 revenue forecast to more than $90 billion.

That outlook implies roughly 120% growth for Oracle Cloud Infrastructure, according to Stifel.

However, the firm expects lower gross margins in the near term even though it believes the impact could eventually be offset by faster OCI growth and greater operating expense efficiencies.

Investor Day becomes next test

Oracle’s latest results have strengthened the argument that its AI spending is beginning to produce tangible growth, but the scale of its capital requirements means investors are likely to remain focused on cash flow, margins and financing.

The company’s $664 billion backlog provides significant visibility, but converting that pipeline into revenue will depend on Oracle continuing to bring new data-center capacity online.

The company’s completion of its $20 billion equity offering also removes some immediate funding uncertainty, although its capital spending remains exceptionally high.

With cloud growth accelerating, AI contracts expanding and data-center capacity coming online faster, Oracle has given investors a stronger case for its spending strategy.

The next question will be whether management can sustain that momentum while improving margins and generating enough cash to support its AI ambitions.

For investors, the upcoming Investor Day could therefore prove as important as the earnings report itself, particularly if Oracle uses the event to provide a clearer roadmap for its AI infrastructure expansion, revenue growth and capital requirements.

The post Oracle stock outlook: analysts see more upside as AI growth gains momentum appeared first on Invezz

The situation continues to deteriorate for TripAdvisor’s stock. It fell to a record low of $8.82 on Thursday, extending a downward trend that started in 2014, when shares peaked at $98.80. Most notably, the current price is far below the $17.50 that a mystery buyer, speculated to be Apollo, had offered for the company.

TripAdvisor’s business is facing major headwinds

TripAdvisor, a company that has become a big name in the travel industry, continues to deteriorate, with its revenue and profits falling. 

Its recent results showed that its revenue dropped by 7% in the June quarter to $441 million. This retreat was mostly because of its Hotels and Other segment whose revenue dropped by 21% to $163 million. Its Experiences business made over $278 million during the quarter.

Analysts predict that the weakness will continue in the foreseeable future. For example, the average estimate is that its third-quarter revenue will fall by 17.8% to $453 million. Its fourth-quarter revenue is expected to drop by 17% to $340 million, bringing the annual revenue to $1.58 billion, down by 16.2% on an annual basis.

In contrast, other top companies in the travel industry are doing relatively well despite the ongoing challenges. For example, Airbnb’s annual revenue is expected to grow by 15% this year to $14.16 billion, while Booking Holdings revenue will grow by 8.70% to $29 billion.

TripAdvisor website traffic has slumped

TripAdvisor’s weakness is partly because of the falling traction on its platform, which is evidenced by the falling traffic. SimilarWeb data shows that its website had 100 million visitors last month, down by 3.27% from the previous month. Competition is also rising, including from tools like OpenAI and Anthropic. All of these have led to a significant weakness in bookings.

TripAdvisor’s management is working to address these concerns. For one, they recently decided to sell TheFork to American Express in a $700 million deal. Its goal is to use the funds to improve its balance sheet and improve its capital allocation. 

Most notably, the management said that it was considering additional opportunities to catalyze shareholder value. One of these strategies would be a sale, which would be the most ideal situation for now. The issue, however, is that the management will not find a better offer than the one it rejected. 

Analysts have turned bearish on the company. UBS Group analysts slashed the target from $15 to $12, while B. Riley Financial slashed from $13 to $12. Cantor Fitzgerald cut from $10 to $9.

TripAdvisor stock technical analysis

TRIP stock chart | Source: TradingView

The weekly chart shows that the TRIP stock has been in a strong sell-off in the past few years. It has now plunged below the important support level of $8.82, its lowest level in March and May this year. 

The stock has plunged below all moving averages, a sign that bears remain in control. It also fell below the strong, pivot, reverse level of the Murrey Math Lines tool. Therefore, the stock will likely continue falling, potentially to the Ultimate Support level of $6.25. 

The post Here’s why the TripAdvisor stock has crashed to a record low appeared first on Invezz

The US Consumer Price Index rose 0.4% in August, accelerating from a 0.1% increase in July and adding to pressure on the Federal Reserve to tighten monetary policy at its meeting later this month.

The increase in headline CPI was in line with the Dow Jones consensus forecast.

Prices were also 3.4% higher in August than a year earlier, matching expectations.

However, the core CPI measure, which excludes volatile food and energy prices, rose 0.3% in August after increasing 0.2% in July.

The monthly increase was above the 0.2% economists had expected and could strengthen the case for a rate hike when the Fed concludes its policy meeting next week.

On an annual basis, core inflation eased to 2.4% from 2.5% in July, in line with expectations.

The report is the final major inflation reading the central bank will receive before its policy meeting, which concludes Wednesday with a decision on its benchmark interest rate.

Gasoline drives headline inflation higher

Energy prices were a major contributor to the August increase, with gasoline prices rising 3.9% during the month.

The increase accounted for more than one-third of the overall monthly rise in consumer prices.

The broader energy index rose 2.1% in August and was up 16.3% from a year earlier.

Food prices provided relatively little additional pressure.

The food index increased 0.1% in August, matching its July rise, while prices for food consumed at home were unchanged during the month.

The combination of persistent core inflation and a renewed energy shock has complicated the Fed’s policy outlook.

Stock futures moved higher following the report, with S&P 500 futures up 0.5% and Nasdaq futures gaining 0.7%.

The market reaction came despite growing expectations that the central bank could raise rates as the traders seem to be pricing a rate hike.

Following Thursday’s Producer Price Index release, traders raised the probability of a quarter-percentage-point rate increase to more than 73%, according to the CME Group’s FedWatch gauge.

Rate hike expectations gain momentum

The latest inflation data follow a robust August employment report that had already increased expectations for tighter monetary policy.

Those expectations had weakened after Fed Governor Christopher Waller said at a Reuters NEXT Newsmaker event that he would be inclined to argue for keeping rates steady if incoming data confirmed that inflation pressures were cooling.

The latest CPI reading makes that argument more difficult, particularly because core inflation accelerated on a monthly basis.

Energy prices are also becoming an increasingly important risk.

The conflict involving Iran has pushed Brent crude prices above $100 a barrel, raising concerns that higher fuel costs could spread through the broader economy.

The European Central Bank raised its key interest rates earlier on Thursday in response to inflationary pressures associated with the war and higher energy costs.

Economist says Fed may need to reverse cuts

Joseph Brusuelas, principal and chief economist at RSM US, said the combination of the latest producer and consumer inflation readings pointed to a need for action from the Fed.

“Given that oil and distillate prices have meaningfully accelerated into September and are likely to be passed downstream to consumers, the combined August Producer Price, and Consumer Price Indices demand action out of the Federal Reserve at its next meeting,” Brusuelas said.

He argued that several separate forces are now reinforcing inflationary pressures.

“The combination of war induced energy shock, tariffs resulting in higher inflation and the draw upon commodities and finished goods to support the buildout of artificial intelligence infrastructure are all pushing the price level higher,” he said.

Brusuelas said it was time for the Fed to “rip up the textbook on looking through a wartime caused supply shock”.

He argued that the three supply shocks had persisted long enough that policymakers could no longer reasonably treat them as temporary.

He pointed to rising gasoline, diesel and jet fuel prices, saying the increases were increasingly feeding into groceries and transportation costs across the service-based US economy.

Inflation puts Fed credibility in focus

Brusuelas said the central bank should reverse the three rate cuts it implemented in late 2025 and slow an economy that he expects to grow well above trend during the current quarter.

He pointed to nominal GDP growth above 6% in the second quarter, a deficit-to-GDP ratio above 6%, an economy at or near full employment and record corporate profits during the quarter.

By slowing demand, he argued, the Fed could shift some of the inflationary pressure currently being absorbed by households back onto corporate balance sheets through lower profit margins.

“The Fed needs to remove the three rate cuts that they implemented in late 2025 and slow an economy that is likely to grow well above trend in the current quarter,” he said.

Still, Brusuelas acknowledged that the decision remains finely balanced.

“Granted that all of this is a difficult judgement-based call and is truly a coin flip at this juncture,” he said.

But he argued that after the August PPI and CPI reports, and with the prospect of a less disinflation-friendly PCE reading ahead, keeping rates unchanged could create a credibility problem for the central bank.

“However, following the August PPI and CPI data and what will be not a disinflation friendly PCE for the Fed not to hike rates at its next meeting would be a blow to its own credibility,” he said.

With inflation proving more persistent and energy prices adding a fresh source of pressure, the Fed’s next decision is likely to hinge on whether policymakers view the latest acceleration as a temporary supply shock or evidence that broader price pressures are becoming entrenched.

The post US CPI rises 0.4% as expected but core CPI higher: will the Fed hike rates? appeared first on Invezz

Enbridge stock has suffered a sharp drop this week, falling to its lowest level since February, following some notable company announcements. Its US-listed shares have now declined for seven straight weeks and are down 16.50% from their high for the year. So, is it safe to buy the dip?

Why Enbridge stock has slumped

Enbridge is a top Canadian company that ranks as the sixth-biggest firm in the country by market capitalization after RBC, TD Bank, Shopify, BMO, and Scotiabank. 

It is a major player in the energy industry, where it moves, stores, and distributes energy across North America. It does that by operating oil and natural gas pipelines, gas utilities, and storage terminals. 

Enbridge stock slumped this week after it announced the resignation of Greg Ebel as the Chief Executive Officer. He will be replaced by Michele Harradence on January 1. Ebel, who became CEO in 2017, has shepherded the company well, with its stock moving from the low $20s to the current $48. 

Enbridge shares also slumped after the company announced its intention to buy Tallgrass’ crude transportation businesses, which include 75% of Pony Express Pipeline and 51% of Powder River Gateway system. It will also acquire storage capacity of 8.4 million barrels and Stanchion Energy, a crude marketing business. The transaction is valued at $2.55 billion and will help it to grow its market share in the US

In another major development, the company said that it would raise C$2.6 billion from a group of bankers, including RBC, CIBC, BMO, and Scotiabank. These banks will buy shares worth C$2.6 billion, which the company aims to use to fund recently announced acquisitions. 

Enbridge’s business is doing well

These developments come at a time when the company’s business is doing well as energy demand continues to rise. Like Energy Transfer, its revenue jumped to C$29.3 billion from C$14.5 billion in the same period last year. Its six-month revenue jumped to C$51 billion from C$33.3 billion last year.

This revenue growth, however, was offset by a surge in commodity costs, which jumped to C$22 billion from C$8 billion last year. This surge had an impact on its profitability, with the earnings attributable to shareholders falling to C$1.3 billion. It is also spending substantial sums of money on interest payments.

On the positive side, its profitability will likely improve in the coming months as demand for energy continues. 

Enbridge stock price technical analysis

ENB stock chart | Source: TradingView

The daily chart shows that the Enbridge stock price has slumped in the past few months, moving from the year-to-date high of $57.6 to a low of $48 today. The down-gap that happened on Thursday was notable because it remained within a consolidation phase for weeks.

The stock has remained below the 50-day Exponential Moving Average (EMA) and the Major S&R pivot point. At the same time, the Relative Strength Index (RSI) moved to the oversold level of 30.

Therefore, the most likely scenario is where the stock continues falling, potentially to the ultimate support level of $43.75. On the flip side, a move above the resistance level of $52 will invalidate the bearish outlook.

The post Here’s why the Enbridge stock is in a strong downward trend appeared first on Invezz

US stocks rose Friday as investors looked to recover from four consecutive sessions of declines, with easing oil prices helping sentiment.

The Dow Jones Industrial Average rose 520 points, or 1%, while the S&P 500 gained 0.9% and the Nasdaq Composite advanced 0.8%.

The rebound came after the major averages posted four straight daily declines.

For the Dow, it marked the longest losing streak since late April.

Oil prices retreat from weekly surge

Crude prices pulled back after a sharp rally earlier in the week triggered by escalating tensions in the Middle East.

West Texas Intermediate futures fell 3% to $99.28 a barrel, while Brent crude futures declined 3.1% to $104.32.

Despite Friday’s declines, both contracts remained on track for weekly gains of about 8%.

The retreat below the psychologically important $100 level for WTI helped ease some of the immediate pressure on stocks.

Oil prices have become a major source of concern for investors as the prolonged conflict between the US and Iran raises the risk of further supply disruptions and higher energy costs.

CPI lifts Fed rate-hike expectations

The market rebound came despite a mixed August consumer price index report that strengthened expectations for tighter monetary policy.

The consumer price index rose 0.4% on a seasonally adjusted basis in August, bringing the annual increase to 3.4%, according to the Bureau of Labor Statistics.

Both figures matched Dow Jones estimates.

Core CPI, which excludes volatile food and energy prices, rose 0.3% from the previous month, 0.1 percentage point above expectations.

The annual core inflation rate was 2.4%, in line with forecasts.

The report was the final major inflation reading available to the Federal Reserve before its policy meeting next week, which concludes Wednesday with a decision on interest rates.

Traders responded by sharply increasing their expectations for a 25-basis-point rate hike.

The probability of an increase rose to around 90%, according to CME Group’s FedWatch tracker, from lower levels before the report.

Energy was a major contributor to the headline increase. Gasoline prices jumped 3.9%, accounting for more than one-third of the overall CPI gain.

The broader energy index increased 2.1% during the month and was up 16.3% from a year earlier.

Food prices edged up 0.1%, while food-at-home prices were unchanged. The food index was 2.7% higher than a year earlier.

Investors look beyond higher rates

The combination of higher oil prices and renewed rate-hike expectations has created a difficult backdrop for equities this week, particularly for growth and technology stocks that are sensitive to borrowing costs.

Friday’s decline in crude prices offered some relief, allowing investors to look beyond the immediate pressure from the inflation data.

Wells Fargo Investment Institute analysts also argued that recent market weakness may not prevent stocks from advancing through the remainder of the year.

September is traditionally a weak month for equity returns, but the firm said recent profitability and capital expenditure trends point toward further gains.

“We believe investors will look beyond the uncertainties of higher interest rates, elevated oil prices and midterm elections to focus on continued economic growth and robust earnings through year-end and into 2027, supporting higher stock prices,” Douglas Beath of Wells Fargo said.

The post Dow surges 500 points after four-day slide as oil prices retreat appeared first on Invezz