Oracle Faces Capacity Test Heading Into Fourth-Quarter Results, RBC Says

Oracle (ORCL) faces a critical test of whether it has overcome its capacity constraints as it continues to expand artificial intelligence infrastructure, RBC Capital Markets said in a note emailed Friday.

The company has consistently pointed to supply as a constraint for cloud infrastructure growth, RBC analyst Rishi Jaluria wrote. That means the focus in the upcoming results will be on megawatt additions, new campus announcements and the pace of graphics processing unit cluster deployments.

"A central question for (the fiscal fourth quarter) is whether Oracle can demonstrate that data center capacity is coming online fast enough to meet the demand pipeline it has been signaling," Jaluria said.

The cloud computing company's remaining performance obligations exceeded $550 billion in the third quarter, reflecting a clear demand signal, he said.

"Any deceleration, or color suggesting that deal activity slowed due to capacity constraints rather than demand softness, will be a key differentiator for how the market interprets the print," Jaluria said.

Oracle is scheduled to release its quarterly results Wednesday. "We maintain a cautious stance heading into the print," according to Jaluria.

RBC raised its price target on Oracle's shares to $190 from $160, citing "peer multiple expansion," while maintaining its sector perform rating.

Shares of Oracle were down 6.7% intraday Friday, but have gained 13% year to date.

Price: $219.54, Change: $-16.80, Percent Change: -7.11%

Philippine May Inflation Eases From Three-Year High, Comes In Below BSP's Forecast

Philippine consumer prices rose 6.8% in May from a year earlier, easing from April's three-year high of 7.2%, according to data from the Philippine Statistics Authority on Friday.The latest print came in below the floor of what Bangko Sentral ng Pilipinas had projected, even as the economy deals with oil price hikes driven by the Middle East conflict.The BSP had expected May inflation to range between 7.1% and 7.9%, driven by rising prices of rice, vegetables, and meat, alongside a weakening peso.The year-to-date average now stands at 4.5%, still above the BSP's 2% to 4% target.The main driver of the slowdown was transport inflation, which decelerated to 16.2% in May from 21.4% in April. Food and non-alcoholic beverage inflation also cooled to 5.7% from 6%, while the prices of housing, water, electricity, gas and other fuels collectively rose at a softer rate of 7.8% from 8.2% previously.Vegetable costs also drove food inflation lower, with the prices of vegetables, tubers, plantains, cooking bananas and pulses rising at 6.2% in May, versus 10.4% in April.Rice inflation, however, accelerated to 15.6% from 13.7%, while corn inflation surged to 25.2% from 21%.Core inflation, which strips out volatile food and energy prices, came in at 4.1%, up from 3.9% in April. However, the print missed the consensus forecast of 4.2%, according to Investing.com.Ahead of the latest data, HSBC said a 50-basis-point hike is likely in June and August, while MUFG senior currency analyst Michael Wan said the BSP will likely hike rates further by about 75 to 100 basis points this year."[W]e will not be surprised if there is an off-cycle meeting to do so coupled with perhaps some chance of a jumbo 50bps rate hike moving forward," Wan said in a note last month.In MUFG's latest note on Friday, analyst Lloyd Chan said, "With oil prices remaining elevated, inflation risks are skewed to the upside, which could reinforce the case for further policy tightening to contain price pressures and support the PHP."

$^PSEi

Dow Logs New High Even as Tech Underperforms

The Dow Jones Industrial Average resumed its record-setting advance on Thursday, even as the technology sector underperformed amid a sell-off in Broadcom (AVGO) and CrowdStrike (CRWD) shares.The Dow rose 1.7% to 51,561.9, notching a fresh closing high after falling on Wednesday for the first time in six sessions. The S&P 500 gained 0.4% to 7,584.3, while the Nasdaq Composite fell 0.1% to 26,831.Barring tech and consumer staples, all sectors ended in the green, led by healthcare.In company news, Broadcom shares tumbled nearly 13%, the second-worst performer on the S&P 500 as the company's artificial intelligence revenue outlook fell short of the market's bullish expectations.The company's decision not to upgrade its 2027 guidance for AI sales apparently disappointed investors, especially as the chip designer reported strong semiconductor demand for its fiscal second quarter, UBS Securities analysts said.CrowdStrike reported strong fiscal first-quarter results amid accelerating demand for AI, but questions around performance sustainability remain, BofA Securities said. The stock fell 3.8%.Ciena (CIEN) plunged nearly 14%, the steepest decline on the S&P 500, despite providing an upbeat fiscal third-quarter revenue outlook. The networking systems and software company's results topped market estimates in the prior three-month period."AI and cybersecurity remain important long-term themes, but popular themes can carry heavy expectations," Ruben Dalfovo, investment strategist at Saxo Bank, said in a report. "In a hot market, even excellent earnings may need to bring their own fire extinguisher."UnitedHealth (UNH) climbed 5.2%, the top gainer on the Dow, after BofA Securities upgraded its rating on the stock to buy from neutral.West Texas Intermediate crude oil was down 3% at $93.19 a barrel in Thursday late-afternoon trade, while Brent fell 2.6% to $95.30.Israel and Lebanon agreed to implement a ceasefire, subject to Iran-backed Hezbollah ending all fire and evacuating its operatives from the South Litani Sector, according to a joint statement from the US, Israel and Lebanon released Wednesday.But just hours after the deal, Israeli forces and Hezbollah fighters launched strikes, CNN reported."News that Israel and Lebanon agreed on a ceasefire could potentially open the door for talks to advance," ING Bank said in a report on Thursday. "Every day that passes without a resumption of oil flows (through the Strait of Hormuz) leaves the market increasingly vulnerable. This increases the pressure to strike a deal."In economic news, job cut announcements in May hit the highest for the month since 2020, Challenger, Gray & Christmas said Thursday, while US weekly applications for unemployment insurance rose unexpectedly."On top of the headline AI story, we're seeing a sharp rise in cuts tied to acquisitions and mergers and a jump in bankruptcy-related losses, which tells me companies are restructuring aggressively as they reposition for an AI-driven economy," Andy Challenger, the firm's chief revenue officer, said in a statement. "The labor market is being reshaped by technology in real time."The Challenger report arrives a day before the May nonfarm payrolls release. Economists surveyed by Bloomberg expect 85,000 new jobs, down from 115,000 in April, with the unemployment rate seen holding at 4.3%.US Treasury yields were lower, with the 10-year rate down 2.4 basis points at 4.48%, and the two-year rate falling three basis points to 4.06%.Gold was last up 0.9% at $4,507 per troy ounce, while silver rose 0.8% to $74.31 per ounce.

$^DJI$^IXIC$^SPX$AVGO$CIEN$CRWD$UNH

Murphy Oil Poised for Cash Flow Uplift Amid High Oil Prices, KeyBanc Says

Murphy Oil's (MUR) cash flow stands to benefit from higher crude prices, with no end to the Middle East conflict in sight yet, KeyBanc Capital Markets said in a note emailed Thursday.The brokerage has upgraded the West Texas Intermediate outlook to $85 a barrel for this year from $65 at the start of 2026. That should generate incremental cash flows of $666 million for Murphy, which is expected to produce 33.3 million barrels in 2026.None of that production is hedged, which means the oil exploration and production company can sell output at prevailing rates."Profound (cash flow) uplift from unhedged production stream is gamechanger for balance sheet and cash return optionality," KeyBanc analyst Tim Rezvan said.KeyBanc upgraded Murphy's stock to overweight from sector weight, with a $48 price target.The US and Israel attacked Iran at the end of February, resulting in the effective closure of the Strait of Hormuz. While there have been a series of talks following ceasefire deals, the parties are yet to finalize a framework for a long-lasting peace."The growing attacks in Lebanon by Israel appear to be a clear obstacle to a peace deal," Rezvan said. "We strenuously disagree with the view that an imminent agreement between the US and Iran will remove the risk premium that we believe should remain embedded in oil prices for the foreseeable future."Shares of Murphy closed 2% higher on Thursday, and have gained 28% year to date.The company's stock has pulled back 8% from its year-to-date high in April, creating an attractive entry point for investors ahead of second-quarter results, Rezvan said."As physical inventories dwindle and Israel continues attacks in Lebanon, we see upside risks to oil," he said.Price: $40.31, Change: $+1.14, Percent Change: +2.91%

$MUR

Related Articles

Philippine May Inflation Eases From Three-Year High, Comes In Below BSP's Forecast

Dow Logs New High Even as Tech Underperforms

Murphy Oil Poised for Cash Flow Uplift Amid High Oil Prices, KeyBanc Says