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Oracle (ORCL) Unveils Cloud Lift Services: Major Takeaways

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Zacks Equity Research
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Oracle ORCL recently launched Oracle Cloud Lift Services for its global Oracle Cloud customer base at no extra cost.

Oracle Cloud Lift Services constitutes technical tools and cloud engineering solutions for performance analysis, application architecture and go-live support to assist clients seamlessly shift their workloads to Oracle Cloud Infrastructure (OCI).

With the new Cloud Lift services, the tech giant will aid customers until the workloads are moved into production as well as train their employees to manage the smooth running of the same on the cloud environment.

Oracle Corporation Price and Consensus

Oracle Corporation Price and Consensus
Oracle Corporation Price and Consensus

Oracle Corporation price-consensus-chart | Oracle Corporation Quote

Oracle Cloud Lift Services recently were leveraged by Seattle Sounders FC, Rice University and Cargill.

By providing all technical delivery at a single point of contact, Oracle Cloud Lift Services is expected to increase the adoption of OCI and boost cloud revenues.

This is expected to instil investors’ confidence in the stock. Notably, Oracle’s shares have returned 39.5% compared with the industry’s rally of 47.8%.

Lucrative Cloud Market Bodes Well

Oracle is witnessing healthy adoption of its data cloud solutions, Enterprise Resource Planning (ERP) and Autonomous Database offerings. Moreover, the next-generation autonomous database rolled out by Oracle, which is supported by machine learning (ML), is gaining considerable traction.

New product launches, including new OCI managed services, are likely to boost growth in this category. Autonomous database in Gen2 public cloud infrastructure is also witnessing healthy uptake.

In the third quarter of fiscal 2021, Cloud services and license support revenues increased 5% year over year to $7.252 billion and contributed 72% to total revenues. Autonomous database consumption revenues climbed 55% and annualized consumption revenues for OCI services soared 123% in the last reported quarter.

Going ahead, Oracle’s software-as-a-service (SaaS) and platform-as-a-service (PaaS) products are anticipated to witness strong uptake over the next few years as enterprises increasingly migrate to the cloud in the wake of the pandemic.

Migration of workloads to cloud environment offers organizations with improved scalability, faster deployment, cost efficiency and higher security. The global cloud migration services’ market is expected to witness a CAGR of 28.89% between 2021 and 2026 and reach $448.34 billion, according to a Mordor Intelligence report.

Headwinds Persist

Nevertheless, Oracle needs to watch out for intense competition in the lucrative cloud space from established players like Amazon’s AMZN Amazon Web Services (“AWS”), Microsoft’s MSFT Azure and Alphabet’s GOOGL Google Cloud.

Per a Canalys Report, cloud infrastructure services spending for the fourth quarter of 2020 stood at $39.9 billion, up 32% year over year. AWS along with Azure accounted for more than 50% of the market share. AWS’ share was 31% of the total spending on cloud infrastructure services, while Microsoft Azure’s share came in at 20%.

Also, higher spend on cloud platform amid intensifying competition is likely to put pressure on Oracle’s margin expansion, at least in the near term.

At present, Oracle carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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