Tech Firms Embrace Stock Splits: A Case Study on Oracle

Stock splits are back in fashion among tech giants. With Oracle making notable gains, experts speculate about a potential stock split. Such strategies signal confidence and broaden appeal among investors.

Date: 21-03-2025

AI Rating: 7

Understanding the Impact of Stock Splits

Stock splits have become a trend among major technology companies, with firms like Nvidia, Broadcom, and Super Micro Computer announcing such strategies recently. While a stock split does not impact a company's financial fundamentals, it often signals positive investor sentiment and confidence in future performance.

Specific to Oracle, the company is a strong candidate for a stock split, especially considering its impressive return of over 200% in five years and significant revenue growth in its cloud infrastructure business. In its most recent quarter, Oracle reported a remarkable 49% increase in cloud infrastructure revenue year-over-year, totaling $2.7 billion. This follows strong growth rates of 52% and 45% in the two preceding quarters.

Future Performance Indicators

Additionally, Oracle's remaining performance obligations—a measure of expected future revenue—advanced 62% to $130 billion, indicating a robust demand for its services. The increasing customer demand supports plans to expand data center capacity, furthering the company's growth prospects.

Importantly, Oracle’s stock is currently priced at around $150, which, while lower than its recent peak valuation of over 30x forward earnings estimates, remains reasonable given its earnings performance and future prospects.

Stock Price Accessibility

The allure of a potential stock split lies in making shares more accessible to a broader investor base by lowering the per-share price. Even though Oracle's current price point does not appear prohibitive, investors are keen on companies with promising performances, such as Oracle, to identify potential stock split candidates.

Nevertheless, while Oracle exhibits strong fundamentals and growth indicators, analysts note that it may not be necessary for the company to execute a stock split to inspire market enthusiasm or investor confidence.

Stocks: ORCL