According to a report, Oracle and Elon Musk's artificial intelligence-focused startup xAI are reportedly in talks regarding a $10 billion, multi-year cloud computing agreement of significant value. The information caused Oracle's stock price to increase, creating a potential long opportunity.
Oracle Collaborates With Elon Musk
Based on the report, xAI, which has been operating for only one year, is positioned to emerge as a key client of Oracle, competing with OpenAI in developing extensive language models that power generative AI applications.
This prospective agreement represents a substantial milestone for Oracle Cloud Infrastructure, which contends with industry titans, including Amazon and Microsoft. Analysts consider this a critical opportunity for Oracle's development, especially in light of the increasing demand for generative AI, which depends on vast amounts of data and computational resources. Oracle encountered a setback in the previous year due to accelerating sales growth. However, the company recovered with a strong showing in the February quarter, when revenue from cloud infrastructure increased by 49% annually to reach $1.9 billion.
This partnership is not novel; Oracle Chairman Larry Ellison announced in December that the company had procured high-performance computing processors from Nvidia to assist with xAI, with additional support planned.
Bloomberg reported in late April that xAI is currently engaged in negotiations to tender for equity funding of up to $6 billion. Oracle has not commented on The Information report yet.
ORCL Stock Forecast Technical Analysis
In the daily chart of ORCL stock price, the recent price showed bullish pressure from the fundamental factor. The Oracle stock price went higher by 3.87% in the daily chart, creating a bullish breakout from the dynamic 50-day Exponential Moving Average line. Moreover, the 100-day SMA is a major support, from where a valid bullish reversal is visible.
In the volume structure, the most active level since December 2023 is at 113.99 level, which is above the 112.75 static support line. As both levels are below the current price, we may consider the buying pressure as valid.
Based on the daily market outlook, a bullish continuation is highly possible as long as the Oracle stock price trades above the 112.75 static support. In that case, the primary target area would be 132.74. However, an immediate selling pressure with a daily candle below the 112.00 psychological line might alter the current bullish possibility.
